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Feb 16, 2023

Glencore pledges $7.1 bn payout to shareholders as profits soar

Mining company joins Centrica and BP, which made similar moves for shareholders this year

Glencore has announced it intends to return $7.1 bn to shareholders after pre-tax profits soared to a record high of $34 bn in 2022.

The Swiss multinational trading and mining company saw profits increase as repercussions from Russia’s aggression in Ukraine forced the energy and natural resources industries to up their prices to unprecedented levels.

Glencore pledges $7.1 bn payout to shareholders as profits soar
Gary Nagle, Glencore

In a bid to keep shareholders happy, the company says it will launch a $1.5 bn share buyback program after a successful trading year that saw profits climb 60 percent from $12.3 bn in 2021 to $34 bn last year.

Glencore CEO Gary Nagle says ‘significant’ surplus cash generation that helped reduce net debt to $100 mn enabled the company to make these shareholder returns.

China’s reopening, however, ‘together with a continued global focus on energy security, decarbonization and electrification mean demand for many of our commodities is likely to remain healthy, while supply constraints persist and inventories remain relatively low,’ he says.

‘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. We remain focused on operating responsibly and ethically and creating sustainable long-term value for all our stakeholders.’

‘Cost-of-living pressures’

Glencore is the latest natural resources company to see profits reach new highs while countries worldwide continue to face a cost-of-living crisis.

Centrica, owner of British Gas, saw profits triple last year to $3.9 bn from $1.1 bn in 2021. The energy firm, like many others such as E.ON energy and Shell, upped its prices to combat the ripple effect Russia’s invasion of Ukraine has had on the energy sector.

Glencore pledges $7.1 bn payout to shareholders as profits soar
Chris O'Shea, Centrica

In November, the $6.81 bn energy giant commenced a $301 mn share repurchase program, in line with its approach to returning surplus structural capital to shareholders. With the existing program projected to be completed by May 2023, Centrica says it intends to extend this by issuing an additional $361 mn in share repurchases that would result in the company buying back roughly 10 percent of its issued shares since November 2022.

Chris O’Shea, group CEO at Centrica, says: ‘The energy crisis and cost-of-living pressures have created a challenging environment for customers and communities, but we have been able to provide much needed stability and support.’

Meanwhile, energy conglomerate BP saw profits reach $27.6 bn in 2022, up from $12.8 bn the previous year, reflecting the impact price increases have had on the energy sector.

During 2022, BP raised dividends by 21 percent since Q4 2021, reduced its net debt by $9.2 bn, invested ‘with discipline’ and announced $11.25 bn of share buybacks, says Murray Auchincloss, CFO at the energy company.