(Bloomberg) -- Glencore Plc reported a steep drop in annual profit and lowered its dividend, after markets retreated from the price spikes and wild swings that drove blockbuster earnings in the aftermath of Russia’s invasion of Ukraine.

Glencore reported core earnings of $17.1 billion, half the record number it posted a year ago, though still one of its best-ever performances. The commodity trader and miner saw profits soar in 2022 as Russia’s invasion of Ukraine sent energy prices to records and dislocated global trade flows, but many of those pressures have now eased. Glencore fell 5.2% in London trading by 8:42 a.m.

Glencore slashed its dividend to $1.6 billion and for the first time in several years has not announced a new share buyback program. The company had been funneling massive returns to shareholders in recent years — it announced a combined payout of $7.1 billion this time last year — but is temporarily shifting focus to managing its debt levels after agreeing to buy Teck Resources Ltd.’s coal business.

Glencore’s sprawling commodity trading business also reported a sharp drop in earnings as the volatility that its traders thrive on began to fade. The unit earned $3.5 billion last year, down from a record $6.4 billion in 2022. The drop was driven by a 67% decline in energy trading profit, while the company’s metals traders saw a small increase.

Nickel Plunge

The drop in group earnings was driven by weaker energy prices, particularly for coal, which has been a key profit driver in recent years. The company’s energy profits from its own assets fell to $8.5 billion from a staggering $18.6 billion last year — which was more than its entire earnings in 2023.

Glencore, which has sought to position itself as a producer of the metals needed to decarbonize the global economy, has also been caught up in a rout of many of the commodities the industry was most bullish about. Nickel prices sank 45% last year, hammered by a surge in supply from Indonesia, while cobalt also plunged. Other metals like copper have also underwhelmed amid a wobbling Chinese economy.

The company recorded $2.5 billion of writedowns at year-end, including $762 million on its Mutanda copper and cobalt mine in the Democratic Republic of Congo. 

“Although the current macroeconomic environment remains challenging, global economic growth is forecast to bottom out in 2024,” Chief Executive Officer Gary Nagle said. “Expected interest rate cuts and corresponding restocking along the supply chain are likely to bring an improvement in demand conditions in western markets later in the year.”

Glencore agreed to buy Teck’s steelmaking coal business in November, ending a months-long saga that started as bitter takeover bid by the commodity trader. Once Glencore has completed the deal, it plans to spin off the newly combined coal unit.

The Teck coal deal “will be transaction will be transformational for Glencore, but the company is in somewhat of a holding pattern until that deal is done,” Jefferies analyst Christopher LaFemina said. 

(Updates with shares and details on writedowns.)

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