Energy market volatility and high prices drive Glencore’s record H1 earnings

Elevated energy market dislocation, volatility, risk and supply disruption, led to record prices for many coal and gas benchmarks and physical premia, underpinning a $10.3 billion increase in Group Adjusted EBITDA to $18.9 billion.

Industrial Adjusted EBITDA increased $8.4 billion to $15.0 billion period-on-period, benefitting primarily from record coal prices, augmented by the incremental 66.7% contribution from Cerrejón, acquired in January 2022.

Marketing Adjusted EBIT more than doubled to $3.7 billion, with energy products performing exceptionally well amid the complex, volatile and elevated market risk backdrop, characterised by extreme dislocations and price movements.

INDUSTRIAL UNIT COSTS HIGHER, PRIMARILY DUE TO THE BROAD INFLATIONARY ENVIRONMENT AND LOWER BY-PRODUCT CREDITS

• H1 unit costs were: Copper 54¢/lb, zinc 9¢/lb (48¢/lb ex-gold), nickel (ex Koniambo) 370¢/lb and thermal coal $75.4/t
• Full year estimated unit costs: Copper 93¢/lb, zinc 29¢/lb (63¢/lb ex-gold), nickel (ex Koniambo) 359¢/lb and thermal coal $79.4/t (all including updated by-product credits, as appropriate)
• H1 Industrial capex was $2.0 billion (H1 2021: $1.8 billion); full year guidance unchanged at $5.4 billion

INCOME FOR THE PERIOD ATTRIBUTABLE TO EQUITY HOLDERS OF $12.1 BILLION

• Including a $1.5 billion gain on acquiring the remaining 66.67% interest in Cerrejón and disposal of Ernest Henry

Glencore’s Chief Executive Officer, Gary Nagle, commented: “Notwithstanding what has clearly been a very complex environment for our markets, our operations, and the world in general, we are pleased to report an exceptional financial performance for Glencore over the period.

“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 $10.3 billion increase (119%) in Group Adjusted EBITDA to $18.9 billion. Marketing Adjusted EBIT more than doubled to $3.7 billion, with energy products the standout, while Industrial Adjusted EBITDA increased $8.4 billion to $15.0 billion period-on-period.

“Looking ahead, tightening financial conditions and a deteriorating macroeconomic environment present some uncertainty for commodity markets through the second half of the year. However, with few short-term solutions to rebalance global energy markets, coal and LNG prices look set to remain elevated during this period, particularly given the current challenge of securing sufficient and reliable energy supply for the Northern hemisphere winter ahead.

“For metals, the outlook is more complex, balancing supply risks, amid labour, water and energy shortages, supply chain disruptions, growing sovereign risk uncertainty and rising costs, against likely weakening end-use markets ex-China. There are some recent signs of China recovering from its Q2 trough, which could help to offset potentially weaker conditions in other key consuming markets.

“The combined strength of our diversified business model across metals and energy industrial and marketing positions has proved itself adept in all market conditions, which should allow us to both successfully navigate the 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 these turbulent times and as always, we remain focused on creating sustainable long-term value for all our stakeholders.”