UPDATE 3-Glencore's 2023 earnings halve on lower commodity prices
(Adds analyst comment, Teck deal details)
By Clara Denina and Pratima Desai
LONDON, Feb 21 (Reuters) - Glencore said on Wednesday lower commodity prices had halved its earnings last year, and slashed its payout to investors, as the company saves to fund the acquisition of a 77% stake in Teck Resources' metallurgical coal business.
After two consecutive record years, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to $17.1 billion from $34.1 billion a year earlier, in line with analysts' consensus estimates.
In preliminary 2023 results, the miner and trader said net debt stood at $4.92 billion at the end of the year, from just $75 million at the end of 2022.
Glencore's shares were down 5.5% at 0922 GMT.
London-listed Glencore's payout of $1.6 billion announced on Wednesday does not include a new buyback scheme, after the existing one ends this month, nor a special dividend, as the company uses its cash for the $6.9 billion acquisition of Canadian miner Teck's unit that is expected to add 20 million tons of steelmaking coal annual capacity to its portfolio.
The deal is expected to close by the third quarter this year, ahead of a planned spin-off of the commodity giant's thermal and metallurgical coal business.
"We expect the company to be positioned for large capital returns after that deal closes, and we expect Glencore shares to begin to outperform again as a result. But, for now, expect rangebound volatility in these shares," Jefferies analysts said.
Record profits in 2022 allowed the company to hand investors $7.1 billion last year.
"Although there are no "top-up" returns at this point, the business is expected to be highly cash generative ... which augers well for top-up returns to recommence in the future," Glencore Chief Executive Gary Nagle said.
Lower prices for battery materials nickel and cobalt due to a slowdown in the electric vehicle sector and for copper because of weakness in manufacturing globally, weighed on mining companies' earnings last year.
Glencore earlier this month said it would sell its stake in loss-making Koniambo Nickel SAS (KNS) in New Caledonia, halting production at its processing plant for six months while a new investor is sought.
Nickel prices fell more than 40% in the past year after production rose in Indonesia, which last year accounted for more than half of global mined supplies, forcing miners to including BHP to mothball assets, delay projects, reduce production.
"We don't expect significant (nickel) price recoveries in the short to medium term ...(but) we've seen many of our customers interested in buying non-Chinese produced or non-Indonesian nickel," Nagle told reporters.
(Reporting by Clara Denina and Pratima Desai; editing by David Evans)
