Glencore looks at leaving London as shares drop and earnings dip

By Clara Denina and Pratima Desai

LONDON (Reuters) -Glencore is considering moving its primary listing from London, it said on Wednesday, after it posted lower earnings, recorded $2.3 billion in impairment losses and said it would return $2.2 billion to shareholders.

Analysts said the dividend and buybacks could boost the London-listed share price, but on Wednesday it had sunk by 7% by 1215 GMT, underperforming peers.

Glencore's impairments stemmed partly from lower assumed coal prices, logistical issues at its South African assets, and the closure of its Koniambo nickel operation in New Caledonia.

"Weaker coal prices have been a major headwind for Glencore over the past six months, but we see value at current levels and the shares offer sector-leading shareholder returns in 2025," Deutsche Bank analysts said in a note.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 16% to $14.36 billion in 2024, from $17.1 billion last year, in line with analysts' consensus estimates of $14.55 billion.

Last year marked the second consecutive decline in profit for the Swiss-based miner and commodity trader, following two record years, when metal prices soared.

Its $2.2 billion payout means shareholders will get 18 cents per share this year, compared with 13 cents last year. Analysts said a $1 billion repurchase plan was designed to bolster the company's undervalued stock price.

Glencore's share price lost 25% of its value in 2024, more than other diversified miners - BHP and Rio Tinto's shares lost 21% and 19% respectively, while Anglo's shares rose 20%, boosted by takeover approaches.

The company's net debt rose to $11.2 billion, from $4.9 billion in 2023, partly due to $6.7 billion of net capex and the $7 billion acquisition of metallurgical coal portfolio EVR, which it bought from Teck Resources. This was above analysts' consensus expectation for debt of $8.7 billion.

The company said the net debt increase was balanced by "healthy cash generation, along with $1.8 billion of net working capital inflows".

NEW YORK PRIMARY LISTING?

Glencore is studying whether its shares would gain if it moved its primary listing to another exchange.

"We are now actively considering the right exchange for our shares ...we are saying is - is there a better exchange for us to trade our securities?," Chief Executive Gary Nagle said.

He added New York was at the top of the list under consideration.

Companies have left London in recent years for the United States and also European Union markets, under pressure from investors seeking to boost the value of their shares.

Among the most high-profile companies to have left London in 2024 were travel giant TUI and Netherlands-based food delivery company Just Eat Takeaway.com. BHP Group, the world's largest mining company, collapsed its dual listing in favour of Sydney in 2022.

"Re-domiciling to the U.S. would be a positive catalyst for these shares if the company decides to go down that path," Jefferies analyst Chris LaFemina said.

Glencore's Nagle also said that global trade uncertainties could benefit its marketing, while signs of continued growth in China and a resilient U.S. economy should increase commodities demand this year. He added that U.S. tariffs introduced by the Trump administration "could act as a bit of a handbrake".

"Although maybe long term (tariffs) may not be good for global growth, in the short term, as we see this volatility and uncertainty, it raises our ability to get better returns on our marketing because of dislocation and arbitrage opportunities," he said.

Glencore trades most of the products it mines, including metals, thermal and metallurgical coal, oil and gas. Its adjusted EBIT from the marketing division at $3.2 billion, the higher end of its guidance, was down 8% from 2023.

(Reporting by Clara Denina and Pratima Desai; editing by Barbara Lewis)