Glencore’s Shares Plunge Amid Earnings Slump and Strategic Shifts

Shares of Glencore, listed on the London Stock Exchange as GLEN.L, were down by 2.2% at 1234 GMT, having earlier plummeted by over 6%.

Glencore’s stocks took a nosedive on Wednesday following a steep decline in earnings for the previous year, attributed to diminished commodity prices, alongside a drastic reduction in payouts to investors aimed at financing a 77% stake in Teck Resources’ metallurgical coal enterprise.

After enjoying two consecutive years of record earnings, adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) plummeted to $17.1 billion from $34.1 billion the previous year, aligning with analysts’ consensus estimates.

Shares of Glencore, listed on the London Stock Exchange as GLEN.L, were down by 2.2% at 1234 GMT, having earlier plummeted by over 6%.

The Switzerland-based commodity titan’s declared payout of $1.6 billion, disclosed on Wednesday, excludes any fresh buyback initiative following the expiration of the existing one this month, as well as forgoing a special dividend.

In order to finance the $6.9 billion acquisition of Teck’s Canadian mining division, Glencore has slashed this year’s shareholder dividend to 13 cents per share compared to last year’s 34 cents.

This acquisition is poised to augment Glencore’s portfolio with an additional 20 million tons of annual steelmaking coal capacity, anticipated to conclude by the third quarter of this year, ahead of a planned divestiture of the company’s thermal and metallurgical coal enterprise.

“Although there are no ‘top-up’ returns at this point, the business is expected to be highly cash generative … which augurs well for top-up returns to recommence in the future,” remarked Glencore Chief Executive Gary Nagle.

Nagle further affirmed that the company will persist in seeking shareholders’ input regarding the divestiture post the acquisition’s finalization.

In regard to the company’s strategy for growth, Glencore aims to bolster copper production, banking on its two brownfield projects in Argentina.

“We’ll start deploying capital to those brownfield sites in 2027-2028,” affirmed CFO Steven Kalmin.

Copper finds application in energy transition technologies such as solar panels and electric vehicles.

Earlier this month, Glencore announced its intention to offload its stake in the loss-making Koniambo Nickel SAS (KNS) in New Caledonia, suspending production at its processing plant for six months while seeking a new investor.

“We don’t expect significant (nickel) price recoveries in the short to medium term …(but) we’ve seen many of our customers interested in buying non-Chinese produced or non-Indonesian nickel,” Nagle informed reporters.