Take me to my superyacht
There is a strong correlation between the time a miner spends talking about environmental, social and governance issues and the quantity of cash pouring out of the money tap. Whether this stems from a deep commitment to unleash the inner Greta and bequeath a healthier world or to avoid the ethical investor blacklist remains a topic for debate. But Glencore’s results come with a strong subtext of "get the superyacht brokers on the line, bonuses are going to be the size of a woolly mammoth".
After the Covid constraints of 2020, the company has seen the prices of most of its commodities come roaring back to multiyear highs on the back of global economic recovery driving demand, while supply constraints linger. Glencore posted record group half-year adjusted earnings before interest, tax, depreciation and amortisation (ebitda) of $8.7bn.
Cash flow was strong and net debt has moved to the lower end of the company’s target range. Copper was the biggest contributor, but coal is expected to have a bumper second half, which may be more popular with shareholders than the eco warriors.
The company is also fighting five bribery and corruption investigations in the US, the UK, Brazil and Switzerland, so legal costs were up to $216m from $56m in the previous year. New CEO Gary Nagle sounds keen to stress his commitment to cleaning up the business, pointing out that everyone involved in last month’s plea bargain in the US has either been disciplined or has left the business. Shareholders will hope the new era involves more profits and less skulduggery.
Weber: Not much heat in this braai
Despite being positioned in a sector that was a pure pandemic sweet spot, this braai master struggled to drum up much interest in its IPO, raising a mere $252m vs the $797m it had been talking about last month.
This may have been due to investor fatigue after somewhere north of $100bn has already been raised in US IPOs this year.
This did leave some managers short of powder for new listings, and the share did enjoy a tidy little bounce after trade opened.
Perhaps the company should have considered a listing on the JSE, on the basis that investors like to punt on products that they know and love, and they would have been embraced with open arms by a nation that views the braai as the high altar of the backyard.
The sector has been a huge beneficiary of the mass exodus from big cities during the pandemic, with consumers ditching the poky little flat with room on the balcony for a small portable in favour of rural space with ample elbow room for an eight-burner behemoth.
Sales of braais and associated kit were up 29% in the US in the year to June, and Weber’s revenues grew 18% and its profits were up 77% to $89m.
Its CEO announced that the company would be launching a "game-changer" line in the next three months, with internet-connected models offering features such as measuring propane levels and ordering new cylinders.
As with all of the internet of things, it does open you up to having your braai hacked by the North Koreans, but that is a risk to be managed.