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Mining industry

Glencore Reports Underwhelming First-Half Results Amid Challenging Market Conditions

Strategic Insights

— 1 min read

Glencore, the global mining and commodity trading company, has reported a significant decline in its first-half results, reflecting the normalization of the resources market and the impact of a less-than-supportive economic environment in China. The company's net income attributable to equity holders plunged by 62% to USD4.57 billion from USD12.09 billion a year earlier, while revenue dropped 20% to USD107.42 billion from USD134.44 billion.

Key Takeaways:

  • Glencore's adjusted earnings before interest, tax, depreciation, and amortization (Ebitda) halved to USD9.39 billion from USD18.91 billion, reflecting the normalization of energy market imbalances and volatility from 2022.
  • Industrial Ebitda declined by 51% to USD7.41 billion, driven by a USD4.4 billion lower contribution from coal operations, mainly due to a decline in realized coal prices and higher costs.
  • Glencore's adjusted Ebitda in Marketing activities nearly halved to USD1.99 billion from USD3.98 billion, but Jefferies said this was in line with its expectations and still tracking to hit USD3.5 billion to USD4.0 billion for the year.
  • The company's attempts to acquire Teck Resources' steel-making coal assets have faced opposition from Bluebell Capital Partners, which wants Glencore to separate its coal mines.
  • Glencore maintains its annual production guidance unchanged, with copper production expected to drop to 1.04 million tonnes in 2023, while coal output is expected to remain flat at 110 million tonnes.
  • Jefferies reiterated its 'buy' rating for Glencore, maintaining its 550.00 pence price target, as the company is well-positioned for the energy transition cycle and appears to benefit from stronger for longer coal prices.

Statistics:

  • Net income attributable to equity holders: USD4.57 billion (2022: USD12.09 billion)
  • Revenue: USD107.42 billion (2022: USD134.44 billion)
  • Adjusted Ebitda: USD9.39 billion (2022: USD18.91 billion)
  • Industrial Ebitda: USD7.41 billion (2022: USD15.81 billion)
  • Adjusted Ebitda in Marketing activities: USD1.99 billion (2022: USD3.98 billion)
  • Net debt: USD1.54 billion (as at June 30, 2023, up from USD75 million as at December 31, 2022)

Sources:

  • Alliance News
  • Jefferies
  • AJ Bell
  • Glencore PLC
  • Teck Resources Ltd
  • Bluebell Capital Partners Ltd
  • FXStreet

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