Glencore PLC Preliminary Results 2020 (1832P)

TIDMGLEN

RNS Number : 1832P

Glencore PLC

16 February 2021

NEWS RELEASE

Baar, 16 February 2021

Preliminary Results 2020

Highlights

Glencore's Chief Executive Officer, Ivan Glasenberg, commented:

"The Covid-19 pandemic is an extraordinary challenge that continues to impact many aspects of day-to-day life. Against this backdrop, the strength of our 2020 underlying performance is a credit to our highly skilled and dedicated employees, and also reflects our unique business model and ability to quickly adapt to changing market conditions and customer needs.

"Navigating from recessionary conditions in the first half to a strong price recovery for most commodities in the second, Adjusted EBITDA finished the year flat at $11.6 billion. An outstanding Marketing performance lifted EBIT by 41% to $3.3 billion, while Industrial Adjusted EBITDA fell 13% to $7.8 billion, primarily reflecting weaker coal prices. A notable improvement was seen at our Katanga operation in the DRC, where its successful ramp-up lifted Africa copper EBITDA to $712 million from a loss of $349 million in 2019. Strong second half cash flows repositioned Net debt of $15.8 billion within our target range, allowing for the resumption of distributions. We are recommending to shareholders a distribution of $0.12 per share.

"As the world focuses on the pathway to recovery from Covid-19, it is clear that meeting the goals of the Paris Agreement has taken on even greater urgency. While innovation and technological advances have transformed how we live and work, the commodities needed to enable this have not. Our commodities are essential in developing all facets of infrastructure needed to deliver the goals of energy and mobility transition.

"We are focused on playing our part in supporting the Paris goals and have set out a clear strategy to address our total emissions footprint - being Scope 1, 2 and 3 emissions.

"Glencore has been transforming the global commodities industry for nearly half a century, growing from a trader of ferrous and non-ferrous metals, minerals and crude oil, into one of the world's largest natural resource companies. Today, the business and its portfolio of commodities is uniquely positioned for the needs of the future. It is ready to support the transition to a low-carbon economy and realise its ambition of net-zero by 2050. We remain focussed on creating sustainable long-term value for all stakeholders while operating in a responsible manner across all aspects of our business"

 
 
                                                                                           Change 
US$ million                                                    2020          2019               % 
-----------------------------------------------------  ------------  ------------  -------------- 
Key statement of income and cash flows highlights(1) 
 : 
Revenue                                                     142,338       215,111            (34) 
Adjusted EBITDA                                              11,560        11,601               - 
Adjusted EBIT                                                 4,416         4,151               6 
                                                             (1,903 
Net loss attributable to equity holders                           )         (404)           (371) 
Loss per share (Basic) (US$)                                 (0.14)        (0.03)           (380) 
Funds from operations (FFO)(2)                                8,325         7,865               6 
Cash generated by operating activities before 
 working capital changes                                      8,568        10,346            (17) 
Net purchase and sale of property, plant and 
 equipment(2)                                                 3,921         4,966            (21) 
 
 US$ million                                             31.12.2020    31.12.2019      Change % 
-----------------------------------------------------  ------------  ------------  ------------ 
Key financial position highlights: 
Total assets                                                118,000       124,076           (5) 
Net funding(2,3)                                             35,428        34,366             3 
Net debt(2,3)                                                15,844        17,556          (10) 
-----------------------------------------------------  ------------  ------------  ------------ 
Ratios: 
 
FFO to Net debt(2)                                            52.5%         44.8%            17 
Net debt to Adjusted EBITDA                                    1.37          1.51           (9) 
 
 
 

1 Refer to basis of presentation on page 7.

2 Refer to page 11, also noting that 2019 FFO was materially impacted by the lag of income taxes paid in 2019, in respect of 2018 profitability.

3 Includes $652 million (2019: $607 million) of Marketing related lease liabilities.

Adjusted measures referred to as Alternative performance measures (APMs) which are not defined or specified under the requirements of International Financial Reporting Standards; refer to APMs section on page 110 for definitions and reconciliations and to note 2 of the financial statements for reconciliation of Adjusted EBIT/EBITDA.

Healthy RESULTS

- $11.6bn Adjusted EBITDA, flat year over year (y/y), with stronger Marketing and Industrial metals offset by weaker coal prices

   -       Net income pre-significant items: $2.5bn, in line with 2019 

- Significant items are mainly non-cash impairment charges amounting to $5.9bn (2019: $2.4bn), primarily in respect of Mopani, Colombian coal and the African oil portfolio. Resulting statutory loss of $1.9bn

   -       Net purchase and sale of PP&E: $3.9bn, down 21% 
   -       Proposed $0.12/share ($1.6bn) 2021 distribution 

Resilient industrial asset performance

- Industrial Assets Adjusted EBITDA $7.8bn, down 13%. Strong metals performance outweighed by weaker coal prices

   -       Metals $7.3bn (+31%), Energy $1.0bn (-73%); balance is Corporate and other 

- Early Covid-19 impacts followed by multi-year highs for base metals. Energy complex also recovered into year-end

- Cost/margin performance: Cu 94c/lb (-15c/lb y/y); Zn -7c/lb (-35c/lb y/y); Ni 376c/lb (-22c/lb y/y); coal $45.90/t ($11/t margin)

Outstanding marketing results

   -       Marketing Adjusted EBIT $3.3bn, c. +$1bn y/y (+41%) 

- Energy $1.8bn (+33%) driven by exceptional price movements/dislocations and logistics/storage demand

- Metals $1.7bn (+53%) reflects supportive market conditions and absence of cobalt market challenges experienced in 2019

   -       Viterra agricultural business contributed $211m (2019: $58m) share of net earnings 
   -       Unchanged longer-term guidance range of $2.2-3.2bn Adjusted EBIT 

strong balance sheet

- Net debt $15.8bn, successfully repositioned in our $10-16bn target range; targeting below the middle of the range by end 2021

   -       Net debt / Adjusted EBITDA down to 1.37x 

- RMI $19.6bn, near the top end of our $15-20bn target range, reflecting higher metal prices and carry-trade opportunities

- Available committed liquidity of $10.3bn; bond maturities capped at c.$3bn in any given year

- Spot illustrative free cash flow generation of c.$7.2bn from Adjusted EBITDA of $16bn, using end of January 2021 prices

Sector-LEADING CLIMATE STRATEGY

- Medium-term Paris aligned total C0(2) e emissions reduction targets and 2050 net zero ambition for Scope 1+2+3

   -       Responsible stewardship of declining coal business over time as industry decarbonises 
   -       Climate strategy to be put to shareholders for an advisory vote at our AGM in April 

Portfolio OPTIMISation continuing

   -       Finalised agreement for sale of Mopani, with completion expected in Q2 2021 
   -       Informed the Colombian government of our intention to relinquish Prodeco's mining licences 
   -       Contributed our share of Alumbrera into the larger MARA joint venture 

To view the full report please click https://www.glencore.com/dam:jcr/39edd425-7a17-4b9d-8f0b-051e11da1083/GLEN-2020-Preliminary-Results.pdf

For further information please contact:

 
 Investors 
 Martin Fewings        t: +41 41 709       m: +41 79 737     [e-mail] 
                       2880                5642 
 Media 
 Charles Watenphul     t: +41 41 709       m: +41 79 904     [e-mail] 
                       2462                3320 
 
 

www.glencore.com

Glencore LEI: 2138002658CPO9NBH955

Notes for Editors

Glencore is one of the world's largest global diversified natural resource companies and a major producer and marketer of more than 60 responsibly-sourced commodities that advance everyday life. The Group's operations comprise around 150 mining and metallurgical sites and oil production assets.

With a strong footprint in over 35 countries in both established and emerging regions for natural resources, Glencore's industrial activities are supported by a global network of more than 30 marketing offices. Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, battery manufacturing and oil sectors. We also provide financing, logistics and other services to producers and consumers of commodities. Glencore's companies employ around 145,000 people, including contractors.

Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative. Our ambition is to be a net zero total emissions company by 2050

Important notice concerning this document including forward looking statements

This document contains statements that are, or may be deemed to be, "forward looking statements" which are prospective in nature. These forward looking statements may be identified by the use of forward looking terminology, or the negative thereof such as "outlook", "plans", "expects" or "does not expect", "is expected", "continues", "assumes", "is subject to", "budget", "scheduled", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "anticipates" or "does not anticipate", or "believes", or variations of such words or comparable terminology and phrases or statements that certain actions, events or results "may", "could", "should", "shall", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements are not based on historical facts, but rather on current predictions, expectations, beliefs, opinions, plans, objectives, goals, intentions and projections about future events, results of operations, prospects, financial condition and discussions of strategy.

By their nature, forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond Glencore's control. Forward looking statements are not guarantees of future performance and may and often do differ materially from actual results. Important factors that could cause these uncertainties include, but are not limited to, those disclosed in the last published annual report and half-year report, both of which are freely available on Glencore's website.

For example, our future revenues from our assets, projects or mines will be based, in part, on the market price of the commodity products produced, which may vary significantly from current levels. These may materially affect the timing and feasibility of particular developments. Other factors include (without limitation) the ability to produce and transport products profitably, demand for our products, changes to the assumptions regarding the recoverable value of our tangible and intangible assets, the effect of foreign currency exchange rates on market prices and operating costs, and actions by governmental authorities, such as changes in taxation or regulation, and political uncertainty.

Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this document will actually occur. You are cautioned not to place undue reliance on these forward-looking statements which only speak as of the date of this document.

Except as required by applicable regulations or by law, Glencore is not under any obligation and Glencore and its affiliates expressly disclaim any intention, obligation or undertaking, to update or revise any forward looking statements, whether as a result of new information, future events or otherwise. This document shall not, under any circumstances, create any implication that there has been no change in the business or affairs of Glencore since the date of this document or that the information contained herein is correct as at any time subsequent to its date.

No statement in this document is intended as a profit forecast or a profit estimate and past performance cannot be relied on as a guide to future performance. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities.

The companies in which Glencore plc directly and indirectly has an interest are separate and distinct legal entities. In this document, "Glencore", "Glencore group" and "Group" are used for convenience only where references are made to Glencore plc and its subsidiaries in general. These collective expressions are used for ease of reference only and do not imply any other relationship between the companies. Likewise, the words "we", "us" and "our" are also used to refer collectively to members of the Group or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.

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February 16, 2021 02:00 ET (07:00 GMT)