Glencore Reports Mixed 2024 Results: Net Loss Amid Strong Marketing Performance and Shareholder Returns
Why we think this is neutral
Glencore's 2024 results present a mixed picture. The company faced significant headwinds, particularly in the energy coal market, leading to a 16% decrease in Adjusted EBITDA and a net loss of $1.6 billion. However, these challenges were partially offset by a robust Marketing performance, with Adjusted EBIT reaching $3.2 billion. The company's financial position remains solid, with a healthy Net debt to Adjusted EBITDA ratio of 0.78x and strong cash flow generation. The announcement of $2.2 billion in shareholder returns demonstrates confidence in the underlying business despite the challenging environment. While impairments have impacted the bottom line, they don't affect cash flow generation, and the company's outlook for production growth remains positive. The balance between these factors supports a neutral sentiment.
Key Points
- Adjusted EBITDA decreased 16% to $14.4 billion
- Net loss of $1.6 billion, primarily due to impairments
- Marketing Adjusted EBIT strong at $3.2 billion
- Funds from operations up 11% to $10.5 billion
- Net debt to Adjusted EBITDA ratio healthy at 0.78x
- Announced $2.2 billion in shareholder returns
- Expect 4% compound annual growth rate in production volumes to 2028
- Challenges in energy coal and custom metallurgical operations
- Strong cash flow generation despite lower earnings
- Current share price below recent broker targets
Summary
Glencore's 2024 results reflect a challenging year, with Adjusted EBITDA down 16% to $14.4 billion and a net loss of $1.6 billion. The decline was primarily driven by lower energy coal prices and impairments. However, the company demonstrated resilience through its diversified business model. The Marketing division performed strongly, with Adjusted EBIT of $3.2 billion, at the top end of long-term guidance. Despite the headwinds, Glencore maintained a solid financial position with Net debt to Adjusted EBITDA at 0.78x and announced $2.2 billion in shareholder returns. The company expects a 4% compound annual growth rate in production volumes to 2028, indicating confidence in its future prospects. Recent broker targets ranging from 500p to 550p suggest potential upside from the current share price of 353.55p.