By Scott Kanowsky
Investing.com -- London-listed shares in Glencore PLC (LON:GLEN) rose on Thursday after the mining giant pledged to deliver an extra $4.5B to shareholders as first-half earnings hit a fresh record, thanks in part to a surge in energy prices.
Group adjusted earnings before interest, tax, depreciation, and amortization came in at $18.9B in the first six months of the year, a jump of 119% and above analyst estimates. Boosting Glencore's income was a spike in fossil fuel prices, especially for coal, sparked by supply constraints stemming from the war in Ukraine.
Performance was strong at the company's coal operations, where core earnings increased to $8.9B. Glencore's trading unit, which differentiates it from its mining peers, also posted $3.7B in income - beating its previous guidance.
However, investments in the trading division moved higher by $5B, potentially weakening shareholder payouts. Glencore previously said that it will increase the trading business' working capital to compensate for an uptick in shipping expenses and helps traders hedge bets in a volatile commodities market.
Even still, the company still unveiled a plan to "top-up" shareholder returns through a $1.45B special dividend and a $3B share buyback program.
Glencore expects fuel prices to stay high for the rest of the year despite uncertainty for commodity markets linked to tightening global financial conditions, a "deteriorating" economic environment, and concerns over Russian gas flows into Europe.
"With few short-term solutions to rebalance global energy markets, coal and LNG prices look set to remain elevated during this period, particularly given the current challenge of securing sufficient and reliable energy supply for the Northern hemisphere winter ahead," said chief executive officer Gary Nagle in a statement.
Nagle added that the strength of Glencore's metals and trading units leaves the group in a position to meet any short-term headwinds that may arise.