Glencore Plc
Preliminary Results 2019
Glencore's Chief Executive Officer, Ivan Glasenberg, commented:
“Our performance in 2019 reflected the prolonged and uncertain trade deal negotiations, generally weaker prices for our key commodities and some operational challenges experienced at our ramp-up/development assets. Adjusted EBITDA declined 26% to $11.6 billion.
“Our Marketing business finished 2019 on a strong note, generating Adjusted EBIT of $2.4 billion, in line with 2018, with an excellent performance from oil and a stronger second half metals' contribution, helping to offset the cobalt headwinds experienced in the first half.
“In relation to our ramp-up/development assets, performance is steadily improving, in particular at our flagship Katanga operation, which met its second half production targets for both copper and cobalt.
“We are again recommending to shareholders a 2020 base distribution of $0.20 per share, payable in two equal instalments, which is comfortably covered (c.1.5x) by current annualised business free cashflow generation, even applying the presently weakened coronavirus discounted commodity prices.
“We are also pleased to report progress against our commitments to the transition to a low-carbon economy. We are on track to achieve a near doubling of our first GHG target with a reduction in Scope 1 and 2 emissions intensity of c.10% since 2016. Also, in line with our commitment to a Paris consistent strategy, we project a c.30% reduction in absolute Scope 3 emissions by 2035, including natural depletion of our coal and oil resource base over time.
“Looking ahead, in the short-term, we are closely watching coronavirus developments and potential scenario impacts on global growth and markets. As shown over many cycles, our business has various defensive cashflow characteristics, stemming primarily from marketing activities, but also material exposure to precious metals and infrastructure and expected countercyclical working capital inflows. Our priorities for 2020 remain being focused on delivering sustainable long-term returns for all stakeholders, including via delivering a step-change in safety performance, realising the potential of our ramp-up assets, seizing further operational efficiencies, strengthening our balance sheet and managing the transition to Glencore's next generation of leadership.”
|
|
|
|
|
|
US$ million |
2019 |
2018 |
Change % |
|
Key statement of income and cash flows highlights1: |
|
|
|
|
Adjusted EBITDA◊ |
11,601 |
15,767 |
(26) |
|
Adjusted EBIT◊ |
4,151 |
9,143 |
(55) |
|
Net (loss)/income attributable to equity holders |
(404) |
3,408 |
(112) |
|
(Loss)/earnings per share (Basic) (US$) |
(0.03 ) |
0.24 |
(112) |
|
Funds from operations (FFO)2◊ |
7,865 |
11,595 |
(32) |
|
Cash generated by operating activities before working capital changes |
10,346 |
13,210 |
(22) |
|
Net purchase and sale of property, plant and equipment2◊ |
4,966 |
4,899 |
1 |
|
|
|
|
|
|
|
|
|
|
|
US$ million |
31.12.2019 |
31.12.2018 |
Change % |
|
Key financial position highlights: |
|
|
|
|
Total assets |
124,076 |
128,672 |
(4) |
|
Net funding2,3◊ |
34,366 |
32,138 |
7 |
|
Net debt2,3◊ |
17,556 |
14,710 |
19 |
|
Ratios: |
|
|
|
|
FFO to Net debt2◊ |
44.8% |
78.8% |
(43) |
|
Net debt to Adjusted EBITDA◊ |
1.51 |
0.93 |
62 |
|
|
|
|
|
1 Refer to basis of presentation on page 5.
2 Refer to page 10, also noting that 2019 FFO materially impacted by the lag of income taxes paid in 2019, in respect of 2018 profitability (reduction in balance sheet income tax payable of $755 million), as well as $238 million of taxes paid in 2019, expected to be offset against future taxes due or refunded.
3 Adoption of the new lease accounting standard, effective 1 January 2019, resulted in $865 million (non-cash) of new lease liabilities being recognised (see note 1), while $582 million of additional new leases (non-cash) were booked as capital expenditures and debt in 2019, that previously would have been classified as operating leases.
◊ 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 112 for definition and reconciliations, to note 2 of the financial statements for reconciliation of Adjusted EBIT/EBITDA and to page 17 for reconciliations of Mining Margins.
Highlights continued
Healthy cash generation despite significantly lower commodity prices
- 2019 Adjusted EBITDA of $11.6 billion, down 26%
- Net loss attributable to equity holders of $0.4 billion, after $2.8 billion of impairment charges
- Cash generated by operating activities before working capital changes of $10.3 billion, down 22%
- Net capex cash flow of $5 billion
Solid margin and cost performance for our key commodities
- Impact of lower prices on EBITDA margins somewhat moderated by solid cost control performance in our key commodities: EBITDA mining margin◊ (excluding ramp-up/development assets) of 37% (40% in 2018). Coal EBITDA mining margin of 36% (46% in 2018)
- Full year unit cost performance in our key commodities: copper (ex African copper) 81c/lb, zinc 13c/lb (47c/lb ex-gold), nickel (ex Koniambo) 277c/lb and thermal coal $45/t ($26/t margin)
Marketing underpinned by oil's performance
- Marketing Adjusted EBIT of $2.4 billion, down 2% year-on-year. Strong second half metals' performance and robust oil results largely offset the cobalt headwinds experienced in the first half
Balance sheet / cash flow coverage in good shape
- Available committed liquidity of $10.1 billion; bond maturities capped around $3 billion in any given year
- Net debt of $17.6 billion, after $1.25 billion of IFRS 16 related lease liabilities
- 2020 focus on reducing Net debt/Adjusted EBITDA ratio closer to 1x and Net debt towards the c.$14-15 billion range, excluding Marketing related lease liabilities ($0.6 billion as at 31 December 2019). Some return of cash margin calls in respect of Marketing's hedging activities and monetisation of select non-core long-term assets could aid in this process.
- Recommended 2020 base distribution of $0.20 per share ($2.6 billion), payable in two equal instalments.
To view the full report please click