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Glencore share price uptrend supported by FY21 results


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Glencore results show a v-shaped recovery and shareholders are being rewarded through dividend and buyback.

bg_Glencore.jpgSource: Bloomberg
 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Wednesday 16 February 2022

Glencore preliminary results for FY 2021

Glencore has released preliminary results for the full year 2021 (FY21). These can be summarised as follows (FY21 vs FY20):

  • Revenue +43%
  • Adjusted EBITDA +84%
  • Earnings per share (EPS) $0.38 (-$0.14 in FY20)
  • Funds from operations +105%
  • Shareholder returns of $4.0 billion announced, comprising a proposed $0.26/share ($3.4 billion) base distribution in respect of 2021 cash flows, alongside a new $550 million share buyback program

The group has set aside $1.5 billion in provisions in lieu of ongoing investigations into conduct issues in the US, UK and Brazil which are expected to be resolved in 2022.

Glencore remains focused on decarbonisation efforts looking to sustainably deplete its coal operations over time. The company’s key metals (copper, zinc and nickel) align with cleaner green energy initiatives globally.

Strong cash flows from a v-shaped earnings recovery, manageable debt and good shareholder returns, combined with a core focus on global climate friendly commodities, suggest that the forward Price to Earnings multiple of roughly 6.7 times could be attractive for investors with a long-term time horizon on the stock.

Glencore – technical view

Glencore%201602.pngSource: ProRealTime

 

The share price of Glencore remains in an uptrend, although in the short-term the suggestion is that the share price is overbought.

Traders respecting the long-term uptrend might prefer to look for long entry into a correction from overbought territory, followed by a bullish price reversal at either the 408.15 or 387 support levels.

Longer term upside targets for the share are considered at 441.90 (recent high) and 452 (overhead trend line resistance).

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