Glencore shares fall 3.5% as output steerage misses consensus estimates

By Clara Denina and Helen Reid

LONDON (Reuters) -Shares in miner and dealer Glencore (OTC:) fell as a lot as 3.5% on Tuesday after 2023 manufacturing steerage throughout all of the commodities it mines missed consensus estimates.

The corporate gave steerage in the direction of manufacturing of 1.04 million tonnes in 2023, down from 1.06 million this 12 months and in comparison with a consensus of analysts at 1.124 million tonnes.

“Immediately’s launch will drive a fabric rebasing of buyers expectations,” Tyler Broda at RBC Capital Markets mentioned.

“Increased prices, greater capex and decrease manufacturing had been all anticipated by the market, however the numbers have are available in behind our beneath consensus forecasts and we anticipate will materially cut back consensus free money movement estimates.”

Glencore expects 2022 EBITDA (earnings earlier than curiosity, tax, depreciation and amortization) at $28.7 billion and free-cash-flow at $14.7 billion.

Shares, which have gained 50% this 12 months thus far, recovered barely by 1549 GMT buying and selling down 2%, nonetheless underperforming friends.

The corporate mentioned copper manufacturing at its Katanga mine within the Democratic Republic of Congo was affected by points with slope actions and constructions, grid energy instability and in addition greater volumes of acid-consuming ore. Roughly 20% of Glencore’s copper output comes from the mine.

“It has been a difficult 12 months at Katanga, and disappointing by way of output, however numerous wonderful work has been achieved to handle the problems that impacted us,” mentioned Peter Freyberg, Glencore’s head of commercial property on the annual investor day.

Glencore additionally mines and trades nickel, zinc, cobalt, coal and ferrochrome.

Revenue from its buying and selling division, which reached a document $3.7 billion within the first half, effectively above a long-term annual outlook between $2.2 billion and $3.2 billion, is predicted to complete $5.3 billion in 2022, partly resulting from shortages throughout protracted COVID-related lockdowns and the struggle in Ukraine.

The corporate on Tuesday guided to an adjusted EBITDA for the advertising and marketing enterprise at $3.1 billion in 2023.

Glencore’s shareholders reaped an $8.5 billion windfall for 2022, however the prospect of a world recession and doubts over big quantities of financial stimulus in China, the world’s greatest person of uncooked supplies, may have an effect on future returns.

M&A OPPORTUNITIES

The miner additionally mentioned it could elevate its short-term internet debt to as much as $16 billion, the highest finish of its goal vary, for mergers and acquisitions, which might concentrate on doubtlessly shopping for property in what it termed “commodities of the longer term”.

“We will definitely be targeted on the future-facing minerals and metals, so it would actually be within the space that we all know, will probably be in copper, it will be in nickel, it will be in zinc, it will be in cobalt, and doubtless in aluminium – the important thing minerals and metals for the decarbonisation drive of the world,” CEO Gary Nagle instructed buyers.

“These can be ones which are strategic for Glencore, the place Glencore has some type of strategic benefit whether or not or not it’s as a result of we’ve got an present shareholding, present partnerships… these can be very strategic M&A alternatives, and never easy highest-bid-wins,” Nagle mentioned.

Glencore, which has up to now 12 months offered greater than 20 non-core property, owns round 150 working websites.