Glencore Share Price Dropped 6.22% on Downbeat FY ’23 Results

The Glencore PLC (LON: GLEN) share price dropped 6.22% after announcing its preliminary financial results for 2023. The company reported an Adjusted EBITDA of $17.1 billion, a 50% decrease from the previous year, mainly due to the stabilisation and normalisation of global energy trade, including significant drops in coal, LNG, and oil prices.

Pre-significant items net income stood at $6.7 billion, a 65% decline. After accounting for significant items, net income attributable to shareholders fell to $4.3 billion, a 75% decrease. These items primarily comprised impairments, notably due to lower cobalt price forecasts affecting Mutanda and revised macro assumptions for several zinc operations.

Property, plant, and equipment expenditures increased by 22% to $5.6 billion. A base distribution of $0.13 per share ($1.6 billion) is proposed based on the 2023 cash flow. Industrial Assets' Adjusted EBITDA dropped to $13.2 billion, a 52% reduction, primarily due to significantly lower coal earnings as energy prices plummeted in 2023.

Metals segment earnings were $5.4 billion, down 41%, due to lower cobalt, nickel, and zinc prices and volumes. The energy segment saw a 55% decrease to $8.5 billion due to the substantially reduced coal prices.

Unit cash costs experienced changes across the board: Copper costs increased to 163¢/lb, zinc decreased to 49¢/lb, nickel rose to 871¢/lb, and coal production costs were reduced to $70.5/ton. The company anticipates lower unit cash costs in 2024 for copper, zinc, nickel, and coal.

Marketing Adjusted EBIT dropped by 46% to $3.5 billion year-over-year. The energy segment's Adjusted EBIT decreased by 67% to $1.7 billion, signalling a return to market stability after the extreme volatility of 2022.

Glencore's Chief Executive Officer, Gary Nagle, commented: “Against the backdrop of a rebalancing and normalisation of international energy trade flows, our Marketing and Industrial segments posted a lower, albeit healthy, earnings performance in 2023, delivering Group Adjusted EBITDA of $17.1 billion, cash generated by operating activities of $15.1 billion and Net income attributable to equity holders of $4.3 billion. Aided by healthy operational cash generation, after funding $5.6 billion of net capex and $10.1 billion of shareholder returns, the 2023 year-end Net debt outturn was contained to $4.9 billion vs $0.1 billion in 2022.”

Glencore share price. 

The Glencore share price fell 6.22% to trade at 365.38p from Tuesday’s closing price of 389.63p.