Glencore Group Will return $7.1 Billion Gain to Shareholders After 2022 Record Earnings

Glencore PLC reported record 2022 earnings on the strength of considerable growth in its marketing and energy sectors, and the company said on Wednesday it will return $7.1 billion to shareholders.

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The Anglo-Swiss commodities trading and mining corporation announced payouts totaling $5.6 billion and a share repurchase program of $1.5 billion.

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This is the result of improved profitability and a net debt decrease to $75 million, which is a considerable improvement over the market consensus of net debt of about $386 million. RBC Capital Markets stated in a research note that the net debt amount should instead imply total returns on capital of almost $9 billion, making the actual outcome a severe miss.

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Legal provisions of $484 million and Australian tax payment schedules for $1.4 billion, according to the experts of the Canadian bank, are to blame for the gap.

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According to Trade Algo and based on 13 analysts' forecasts, Glencore posted record adjusted earnings before interest, taxes, depreciation, and amortization for 2022 of $34.06 billion, up from $21.32 billion in 2021 and barely over the market average of $33.94 billion.

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In comparison to $4.97 billion a year earlier, the full-year net profit was $17.32 billion, above the $18.97 billion projection of eight analysts from Trade Algo.

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Glencore's trading division, known as the marketing business, saw a 73% increase in adjusted earnings before interest and taxes to $6.4 billion, while energy-adjusted EBIT increased to $5.2 billion from $1.4 billion. The corporation ascribed the sharp increase in energy prices to the already constrained post-pandemic energy markets that were severely disrupted. This led to extremely volatile pricing for oil, freight, gas, and coal.

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China's reopening, along with a continued global focus on energy security, decarbonization, and electrification, implies that demand for many of our commodity markets is likely to remain healthy, while supply shortages persist and inventories remain relatively low, according to Chief Executive Gary Nagle. "High rates of inflation and associated monetary tightening conditions present some risk to the economic outlook in 2023," Nagle said.