GLNCY Glencore Plc (PK)

By Joe Hoppe

Glencore PLC said Wednesday that it will return $7.1 billion to shareholders after reporting record 2022 earnings on the back of significant growth in its marketing and energy divisions.

The Anglo-Swiss commodity mining and trading company declared distributions of $5.6 billion and a $1.5 billion share-buyback program.

This follows increased earnings and net debt reducing to $75 million, significantly beating a market consensus of net debt of around $386 million. However, the net debt figure should imply total shareholder returns of around $9 billion, leaving the actual result a significant miss, RBC Capital Markets said in a research note.

The culprit for the shortfall is $484 million in legal provisions and $1.4 billion for Australian tax payment timings, the Canadian bank's analysts said.

Glencore reported record adjusted earnings before interest, taxes, depreciation and amortization of $34.06 billion for 2022, up from $21.32 billion in 2021 and slightly above a market consensus of $33.94 billion, taken from FactSet and based on 13 analysts' estimates.

Full-year net profit was $17.32 billion compared with $4.97 billion a year earlier, and a forecast of eight analysts from FactSet of $18.97 billion.

Adjusted earnings before interest and tax from the marketing business--Glencore's name for its trading arm--rose 73% to $6.4 billion, while energy adjusted EBIT rose to $5.2 billion, from $1.4 billion. The company attributed the significant energy rise to already tight post-pandemic energy markets jolted by significant dislocation, generating extreme volatility in oil, refining margins, freight, gas and coal prices.

"High inflation rates and associated tighter monetary conditions present some risk to the economic outlook in 2023. China's reopening, however, together with a continued global focus on energy security and decarbonization [and] electrification, mean that demand for many of our commodities is likely to remain healthy, while supply constraints persist and inventories remain relatively low," Chief Executive Gary Nagle said.

Shares at 0821 GMT down from 11.7 pence, or 2.3%, at 504.2 pence.

Write to Joe Hoppe at joseph.hoppe@wsj.com

(END) Dow Jones Newswires

February 15, 2023 03:47 ET (08:47 GMT)

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