Mining and commodities giant Glencore today vowed to pay its shareholders $4.5bn after reporting record half-yearly profits of $18.9bn on the back of soaring commodity prices and market volatility.
The group’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $18.92bn in the six months to June, compared with $8.7bn a year earlier.
The $4.5bn payout will see Glencore buyback $3bn of its own shares from shareholders after paying out a one-off special dividend payout of $1.45bn.
The commodity giant’s $4.5bn shareholder payout comes after US and Brazilian authorities fined the firm almost $1.1bn over claims it paid out $25m in bribes to win oil contracts in Africa and South America.
The firm in June also pleaded guilty to seven counts of bribery brought forward by the UK’s Serious Fraud Office (SFO) over similar allegations of bribery relating to oil contracts in five African countries.
Glencore’s record half-year results come after wild market volatility and Russia’s invasion of Ukraine caused commodity prices – including thermal coal prices – to surge to their highest levels since 2008.
“Global macroeconomic and geopolitical events during the half created extraordinary energy market dislocation, volatility, risk, and supply disruption, resulting in record pricing for many coal and gas benchmarks and physical premia, underpinning a $10.3bn increase in Group Adjusted EBITDA to $18.9bn,” chief executive Gary Nagle said today.
Company bosses said today the volatility was likely to continue in the period ahead. He added that with few short-term solutions to rebalance global energy markets, coal and LNG prices look “set to remain elevated” during the period ahead.
The firm’s trading division enjoyed a rosy six months as profits topped $3.7bn, well ahead of its long term annual outlook range of $3.2bn.
The record earnings come amid a renaissance for coal as prices spike after shortages caused by covid lockdowns and the war in Ukraine. Chief financial officer Steven Kalmin said today that coal was having its “day in the sun”.
Analysts said today the firm looked set to continue reaping the rewards of swings in the energy market with no “quick fix” on the horizon.
“Glencore’s diversification over both energy and metals is bearing fruit in what is proving to be uncertain times,” said Joshua Warner, Market Analyst at City Index.
“There is no quick fix to the problems plaguing the energy markets and this should keep prices for the likes of coal and LNG elevated in the second half.
“However, the outlook for metals looks more complex given supply chain disruptions, rising costs and weakening demand in China – which is the largest consumer of metals in the world – while its vast Marketing division that trades commodities all over the world is also set to normalise after the unit saw earnings more than double in the first half.”
Shares in Glencore jumped beyond three per cent this morning before settling to trade up 2.26 per cent. The firm is currently trading above 20 per cent for the year.