SHAREHOLDER distributions would be a focus on Glencore’s capital markets day scheduled for December 2 following today’s third quarter production update, said Goldman Sachs.
Glencore said earnings before interest and tax for its marketing division would come in at the upper end of its $2.2bn to $3.2bn long-term guidance range.
The bank forecast group earnings before interest, tax, depreciation and amortisation of between $23bn to $25bn for Glencore’s 2021/22 financial year and $11bn to $13bn in free cash flow for the period. This demonstrated “the company’s ability to return cash to shareholders,” said Goldman Sachs.
“We expect the topics of shareholder distributions, extracting value from the portfolio and improving company perception to be front and centre at the December strategic update,” it added.
In August, Glencore announced it would pay a special cash dividend of $500m and also said it planned to buy back up to $650m of its own shares. This took the total proposed payout to shareholders to $2.8bn for the half year which was described by CEO, Gary Nagle, as the start of elevated returns from the group’s industrial assets.
Full year production guidance for Glencore’s metals and energy products remain unchanged, the group said today.
Its copper division, which includes the African Copper division operating out of the Democratic Republic of Congo, reported own source copper production of 895,500 tons, a decline of 4% or 39,200 year on year.
The decline reflected lower mined grades “at various operations. Approximately half this variance relates to lower copper by-product at non-copper department assets,” it said.
From a South African perspective, attributable ferrochrome production totalled 1.07 million tons for the quarter, an increase of 65% or 420,000 tons year on year. The improvement in output was down to the suspension of operations last year as the South African government imposed national a Covid-19 related lockdown.
Coal production totalled 76.3 million tons in the quarter, a 9% decline year on year and reflecting the absence of production from the mothballed Colombian operations of Prodeco and lower domestic demand in South Africa.
Glencore reported an interim EBITDA of $8.7bn, a year on year lift of 79%. The improvement was largely driven by the recovery in the performance of Glencore’s industrial assets (mines) which comprised $6.6bn of the total EBITDA, a 152% year on year recovery, with marketing income making up the balance.
