Glencore returns $2 billion to its shareholders despite earnings decline
Glencore, the commodity trader and miner, announced its results for '2025 on Wednesday. This was just weeks after Rio Tinto, a larger rival, failed to make a takeover offer.
The talks to create a global mining giant worth $240 billion were halted earlier this month due to valuation and ownership disagreements. This highlights the challenges faced by diversified miners who are trying to scale up in order to meet the rising demand for essential minerals.
The adjusted earnings before interest taxes, depreciation, and amortization (EBITDA), which is the group's measure of profit, fell by 6% last year to $13.51 Billion. This was the third consecutive drop for the London listed and Swiss headquartered group after two record years.
Glencore shares rose 3.2% to?1018 GMT, and have risen around 19% this year.
"Despite a modestly reduced adjusted EBITDA result year-over-year, the underlying trend in H2 was evident," said Gary?Nagle, Chief Executive. He said that a 49% rise in core profits during the second half last year was due to higher metals and production volumes.
Copper is essential for power, construction, and the green energy transformation. Mining companies are competing with each other to increase their production by organic growth and deals. The benchmark copper price increased by more than 40% in the past year.
Glencore reported that "energy and steelmaking coke prices" were to blame for the lower earnings.
CEO STILL BACKS INDUSTRY COALITION
Nagle has always argued that consolidation is needed to attract more investment to the mining sector. When asked about the Rio Tinto deal, he said his views had not changed.
He told reporters that he believed consolidation could be beneficial to our shareholders and, of course, for any shareholders that we choose to transact with.
Deutsche Bank analysts said, "The focus will be on next strategic steps for the company."
They said: "We know now that management and key investors are willing to surrender operational control, and in our opinion, a merger is still an option."
Shareholders will receive 17 cents per share, compared to 18 cents in the previous year. The payout is composed of a base distribution of 10 cents based on the cash flow for 2025 and a top-up of 7 cents based on the increasing value of Glencore’s stake in agricultural trading company Bunge.
The company's debt, at $11.2 billion in 2024, was the same as it had been. This included $1 billion of liabilities from leases and marketing, but remained higher than its target amount of $10 billion.
Glencore started a review in July of its industrial assets with the goal of saving $1 billion by 2026. This involved cutting about 1,000 jobs.
Nagle, since taking over in 2021, has closed or divested 35 operations, raising $6.5 billion. The company is currently negotiating to sell 40% of the copper and cobalt businesses in the Democratic Republic of Congo, to an American-backed consortium.
Glencore announced on Wednesday that it had signed a land-access agreement with the DRC state miner Gecamines, for its Kamoto Copper Company operations. The agreement will increase the life of the mine, improve productivity, reduce costs, and ensure long-term access.
Nagle said that Glencore would participate in Project Vault - a U.S. initiative for stockpiling critical minerals. The U.S. Export-Import Bank has provided $10 billion as seed funding for the project, and private investors such as international trading companies have invested $2 billion. Reporting by Clara Denina, Pratima Dasai and Barbara Lewis; editing by Tomasz and Barbara Janowski
(source: Reuters)
