To view the PDF file, sign up for a MySharenet subscription.

GLENCORE PLC - GLN - 2020 Half-Year Report

Release Date: 06/08/2020 09:00
Code(s): GLN     PDF:  
Wrap Text
GLN - 2020 Half-Year Report

(Incorporated in Jersey under the Companies (Jersey) Law 1991)
(Registration number 107710)
JSE Share Code: GLN
LSE Share Code: GLEN
HKSE Share Code: 805HK
Baar, Switzerland

Baar, 6 August 2020

2020 Half-Year Report


Glencore’s Chief Executive Officer, Ivan Glasenberg, commented:
   “Every aspect of life in 2020 has been impacted by the Covid-19 crisis. Our teams have adapted to these difficult
   conditions and we are pleased to announce an overall strong financial performance from our various businesses,
   reflecting the countercyclical earnings power from our large scale Mark eting activities, combined with a cash
   generative industrial asset base, which quickly adapted to the changed environment.
   Mark eting delivered a half-yearly record Adjusted EBIT performance of $2.0 billion, allowing us to raise full-year
   guidance to the top end of our long-term $2.2-3.2 billion range. There were consistently good contributions across the
   board, however oil in particular was able to capitalise on the presence of exceptional market conditions during the half.
   Our Industrial activities faced numerous challenges, but for the most part were able to continue operating relatively
   normally. Unit costs are broadly stable (pre by-product credits), while capex is under close control. In the current
   economic environment, difficult decisions and actions have been considered for moving certain assets into extended
   care and maintenance to rebalance markets with oversupply risk and preserve the resources for a better market
   environment. Impairments of $3.2 billion (net of non-controlling interests and tax) were recognised.
   The outlook remains uncertain in the short term. Notwithstanding our cash-generative business and secure liquidity
   positions, the Board has concluded that it would be inappropriate to make a distribution to shareholders in 2020,
   instead prioritising the acceleration of Net debt reduction to within our target range (<$16 billion), currently expected to
   occur by the end of 2020.
   Over the longer term, our diversified commodity portfolio, positions us well to play a key role in the next upward
   economic cycle, benefiting in particular from the commodities required for the transition to a low-carbon economy. We
   remain focussed on creating sustainable long-term value for all stakeholders.”

US$ million                                                           H1 2020       H1 2019       Change % 2019
Key statement of income and cash flows highlights(1):
Net (loss)/income attributable to equity holders                      (2,600)       226           n.m.          (404)
Adjusted EBITDA(#)                                                    4,833         5,582         (13)          11,601
Adjusted EBIT(#)                                                      1,472         2,229         (34)          4,151
(Loss)/earnings per share (Basic) (US$)                               (0.20)        0.02          n.m.          (0.03)
Funds from operations (FFO)(2)(#)                                     3,686         3,516         5             7,865
Cash generated by operating activities before working capital         4,317         5,409         (20)          10,346
Net purchase and sale of property, plant and equipment(2)(#)          1,700         2,193         (22)          4,966

US$ million                                                           30.06.2020    31.12.2019    Change %
Key financial position highlights:
Total assets                                                          111,952       124,076       (10)
Net funding(2)(3)(#)                                                  36,361        34,366        6
Net debt(2)(3)(#)                                                     19,695        17,556        12
FFO to Net debt(2)(3)(4)(#)                                           40.8%         44.8%         (9)
Net debt to Adjusted EBITDA(3)(4)(#)                                  1.81          1.51          20

1 Refer to basis of presentation on page 5.
2 Refer to page 9.
3 Includes $938 million (2019: $607 million) of Marketing related lease liabilities, excluding which, Net debt increased 11%
  period on period.
4 H1 2020 ratios based on last 12 months’ FFO and Adjusted EBITDA, refer to APMs section for reconciliation.
# 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 69 for definition and
  reconciliations and to note 3 of the financial statements for reconciliation of Adjusted EBIT/EBITDA.

H1 Marketing Adjusted EBIT of $2.0 billion; full year expectation revised to the top end of our long-term range
    –   Marketing Adjusted EBIT of $2.0 billion (H1 2019: $1.0 billion) reflected oil, in particular, benefiting from the volatile
        and structurally supportive marketing environment. Metals also contributed significantly, reflecting the relatively
        quick economic recovery in China
    –   Full year Adjusted EBIT guidance now expected at the top end of our long-term $2.2-3.2 billion range
Industrial Adjusted EBITDA, a solid $2.6 billion in a challenging operating environment
    –   Metals $2.2 billion (down 16%) and Energy $0.7 billion (down 65%). The majority of our assets operated relatively
        normally through the half-year, with the Energy assets disproportionately impacted by lower coal prices
    –   H1 unit costs were: Copper 109¢/lb, zinc 28¢/lb (64¢/lb ex-gold), nickel (ex Koniambo) 230¢/lb and thermal coal
    –   Full year estimated unit costs: Copper 106¢/lb, zinc 5¢/lb (48¢/lb ex-gold), nickel (ex Koniambo) 257¢/lb and
        thermal coal $46/t
    –   Current industrial metals’ prices are substantially higher than H1 2020’s averages; augurs well for an improved
        Metals’ Industrial performance in H2
    –   H1 Industrial capex was $1.8 billion (H1 2019: $2.3 billion); full year expected around $4.0 billion (previous range
        of $4.0-4.5 billion)
Net loss attributable to equity holders of $2.6 billion
    –   Net loss includes impairments attributable to equity holders of $3.2 billion recognised during the period as a result
        of lower commodity prices related to the economic uncertainty arising from the Covid-19 pandemic (notably
        thermal coal, oil and zinc) and / or technical reassessments resulting in reduced life of mine or longer-term project
        realisation expectations
    –   Total comprehensive loss attributable to equity holders of $4.2 billion (2019: income of $0.4 billion) includes
        exchange losses on translation of foreign operations and negative mark-to-market movements on investments
        held at fair value
Net debt of $19.7 billion (including $0.9 billion of Marketing-related lease liabilities)
    –   Net debt to Adjusted EBITDA ratio of 1.81 times is within our <2x cap.
    –   Net debt currently above the upper end of our $10-$16 billion target range; given current healthy levels of operating
        cash flow before working capital changes, expect Net debt to be inside our target range by end of 2020 and down
        from the start of the year
    –   Available committed liquidity of $10.2 billion at 30 June 2020 (31 December 2019: $10.1 billion)

To view the full report please click 
and on the JSE on

For further information please contact:
 Martin Fewings                t: +41 41 709 2880         m: +41 79 737 5642
 Maartje Collignon             t: +41 41 709 3269         m: +41 79 197 4202
 Charles Watenphul             t: +41 41 709 2462         m: +41 79 904 3320
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 160,000 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.

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
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.

Absa Corporate and Investment Bank, a division of Absa Bank Limited

Date: 06-08-2020 09:00:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story