8 August 2023
If you are covering Glencore’s latest results, please see the following comment from Jamie Maddock, equity research analyst at Quilter Cheviot:
"Glencore's recent results have proven to be a mixed bag, with earnings coming in at c$9 billion, 15% below analyst consensus and a staggering 50% lower year-over-year (y/y). This shortfall was driven by a combination of sharply lower commodity prices and an underwhelming contribution from the marketing division.
"While the company has announced an impressive $2.2 billion "top-up" in shareholder capital returns, bringing the total capital returns for 2023 to $9.3 billion, this also fell short of expectations. These returns landed at the low end of consensus, considered "light" relative to what many had anticipated. Glencore's self-imposed capital return framework and potential M&A activities appear to have constrained these returns, hinting at a more cautious approach in the current market climate.
"Adding to the uncertainty, Glencore did not provide any update on the proposed deal with Teck Resources, the North American-listed coal and metal producer. The potential agreement offers an intriguing opportunity for Glencore to exit its controversial yet highly profitable coal operations. While understandable that it wasn’t explicitly mentioned it will likely be an area of focus on the investor results call with analysts aiming to discern any change in the direction and strategy of the company.
"Overall, while the numbers are substantial, the results may leave stakeholders somewhat underwhelmed. The shadow of a fluctuating commodity market and a seemingly cautious approach to both capital returns and strategic partnerships could define the near-term outlook for Glencore. How the company navigates these challenges will be closely watched in the coming months."
