Glencore earnings halve, debt skyrockets by almost 2,000%

Glencore saw its earnings per share for the first half of this year drop by more than 60%, while its net debt increased by 1,956%.

Glencore released its 2023 half-year report today, which saw the mining giant join other key industry players like Anglo American in reporting a significant drop in earnings for the period.

The company’s revenue fell by 20% in the first half of 2023, while its adjusted EBITDA dropped by 50% to $9.4 billion (R176.47 billion).

Glencore’s net debt increased from $75 million (R1.41 billion) at the end of 2022 to $1.54 billion (R28.97 billion) in June 2023. 

However, the company’s net debt to adjusted EBITDA ratio remained low at 0.06.

Glencore said its industrial assets adjusted EBITDA of $7.4 billion (R138.97 billion), down 51%, was impacted primarily by lower pricing, particularly in coal, as well as inflationary cost impacts across the asset base, “much of it having lagged and been heavily influenced by the surge in energy prices during 2022”.

The company’s $9.4 billion adjusted EBITDA reflected the normalisation of primarily energy market imbalances and volatility from the extreme levels seen in 2022.

Regarding its massive net debt increase, the company said, “After consideration of near-term cash commitments and potential M&A, period-end net debt of $1.5 billion, supported circa $2.2 billion of ‘top-up’ shareholder payments, lifting total 2023 announced shareholder returns to circa $9.3 billion”.

Glencore said this additional return will be effected through a $1 billion ($0.08 per share) special cash distribution and a new $1.2 billion buyback programme intended to run until the release of its full-year results in February 2024. 

The special cash distribution of $0.08 per share will be paid alongside the $0.22 per share second tranche of the cash distribution announced in February 2023.