CEO, Gary Nagle says Glencore generated record profits

Glencore’s Chief Executive Officer, Gary Nagle, commented: “The global pandemic, recovery from it and years of underinvestment, followed by conflict in Europe, exposed pre-existing vulnerabilities in energy security and supply chains, underpinning the generally high and volatile 2022 commodity price environment, which enabled the Group to generate record profitability for the year.

”The unprecedented developments in global energy markets were material drivers for both our marketing and industrial businesses, lifting Group Adjusted EBITDA to $34.1 billion, up $12.8 billion over the period.

Marketing posted another record performance, with Adjusted EBIT of $6.4 billion, up 73% year on year, driven primarily by our energy departments successfully navigating the extreme market imbalances, volatility and dislocations across crude oil, LNG, refined products, coal and logistics infrastructure. Industrial EBITDA increased by $10.2 billion to $27.3 billion, benefitting primarily from record prices for our key coal benchmarks, amplified by the incremental contribution from the two-thirds of Cerrejón, acquired in January 2022, that Glencore did not previously own.

“Aligned with the record Adjusted EBITDA results, particularly in marketing, our net working capital significantly increased during the period, reflecting materially higher energy prices and elevated commodity market volatilities, where such additional investment in working capital should be considered in the context of the $3.8 billion increase in Energy Marketing Adjusted EBIT to $5.2 billion.

Accounting for this build, significant surplus cash generation reduced Net debt to $0.1 billion, allowing for today’s announcement of $7.1 billion (c.$0.56/share) of shareholder returns, comprising a $5.1 billion base cash distribution ($0.40/share), an additional $0.5 billion “top-up” cash distribution ($0.04/share) and a new $1.5 billion buy back programme (c.$0.12/share).

“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 decarbonisation / electrification, mean that demand for many of our commodities is likely to remain healthy, while supply constraints persist and inventories remain relatively low.

“Recent government policies, such as the US Inflation Reduction Act and the EU’s proposed Green Deal Industrial Plan, demonstrate the growing need for critical raw materials through to the end of the decade and beyond, necessitating fresh investment in both primary supply and recycling.

“The strength of our diversified business model across industrial and marketing, focusing on metals and energy, has proved itself adept in a range of market conditions, giving us a solid foundation to successfully navigate shorter-term challenges that may arise, as well as meet the resource needs of the future. I would like to thank all our employees for their efforts and tremendous contribution during the challenging, but very successful, 2022. As always, we remain focused on operating responsibly and ethically and creating sustainable long-term value for all our stakeholders.”

STRONG FINANCIAL PERFORMANCE

• $34.1 billion Adjusted EBITDA, up 60% year-on-year (y/y), underpinned by robust Marketing and Industrial results
• Net income, pre-significant items: $18.9 billion, up 107%
• Post significant items, Net income attributable to equity holders was $17.3 billion, up 248%. Significant items reflect various impairments recorded and a gain on the acquisition of Cerrejón
• Net cash purchase and sale of PP&E: $4.5 billion, up 19%
• Shareholder returns of $7.1 billion (c.$0.56/share) announced, comprising a proposed $0.40/share ($5.1 billion) base distribution in respect of 2022 cash flows, alongside an additional ‘top-up’ $0.5 billion ($0.04/share) cash distribution and a new $1.5 billion (c$0.12/share) share buyback programme