REG - Glencore PLC - 2022 Half-Year Report

GlencoreAnnouncement

04/08/2022 07:00

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RNS Number : 8225U  Glencore PLC  04 August 2022

NEWS RELEASE

Baar, 4 August 2022

 

2022 Half-Year Report

Highlights

 

Glencore's Chief Executive Officer, Gary Nagle, commented:

"Notwithstanding what has clearly been a very complex environment for our
markets, our operations, and the world in general, we are pleased to report an
exceptional financial performance for Glencore over the period.

"Global macroeconomic and geopolitical events during the half created
extraordinary energy market dislocation, volatility, risk, and supply
disruption, resulting in record pricing for many coal and gas benchmarks and
physical premia, underpinning a

$10.3 billion increase (119%) in Group Adjusted EBITDA to $18.9 billion.
Marketing Adjusted EBIT more than doubled to $3.7 billion, with energy
products the standout, while Industrial Adjusted EBITDA increased $8.4 billion
to $15.0 billion period-on-period.

"Allied to the record EBITDA, our net working capital significantly increased
during the period, with some $5 billion invested into Marketing, primarily
Energy, in line with the materially higher oil, gas and coal prices, and their
elevated volatilities. Despite this build, significant cash was generated,
which reduced Net debt to $2.3 billion, allowing for today's announcement of
$4.5 billion of "top-up" shareholder returns, comprising a $1.45 billion
special distribution ($0.11 per share) alongside a new $3.0 billion buyback
program (c.$0.23 per share). Today's additional returns lift total 2022
shareholder returns to c.$8.5 billion.

"Looking ahead, tightening financial conditions and a deteriorating
macroeconomic environment present some uncertainty for commodity markets
through the second half of the year. However, with few short-term solutions to
rebalance global energy markets, coal and LNG prices look set to remain
elevated during this period, particularly given the current challenge of
securing sufficient and reliable energy supply for the Northern hemisphere
winter ahead.

"For metals, the outlook is more complex, balancing supply risks, amid labour,
water and energy shortages, supply chain disruptions, growing sovereign risk
uncertainty and rising costs, against likely weakening end-use markets
ex-China. There are some recent signs of China recovering from its Q2 trough,
which could help to offset potentially weaker conditions in other key
consuming markets.

"The combined strength of our diversified business model across metals and
energy industrial and marketing positions has proved itself adept in all
market conditions, which should allow us to both successfully navigate the
shorter-term challenges that may arise, as well as meet the resource needs of
the future. I would like to thank all our employees for their efforts and
tremendous contribution during these turbulent times and as always, we remain
focused on creating sustainable long-term value for all our stakeholders."

 US$ million                                                             H1 2022                    H1 2021                    Change %                       2021
 Key statement of income and cash flows highlights(1):
 Revenue                                                                         134,435                    93,805                              43                    203,751
 Adjusted EBITDA(◊)                                                                 18,918                     8,654                           119                      21,323
 Adjusted EBIT(◊)                                                                    15,415                    5,305                           191                     14,495
 Income for the period attributable to equity holders                               12,085                      1,277                        846                         4,974
 Earnings per share (Basic) (US$)                                                      0.92                       0.10                       820                           0.38
 Funds from operations (FFO)(2◊)                                                    15,425                      7,310                           111                     17,057
 Cash generated by operating activities before working capital changes,            18,290                        7,181                        155                       16,725
 interest and tax

 

 US$ million                            30.06.2022              31.12.2021                Change %
 Key financial position highlights:
 Total assets                                 139,955                   127,510                            10
 Total equity                                  44,451                     36,917                          20
 Net funding(2,3◊)                             27,987                    30,837                           (9)
 Net debt(2,3◊)                                  2,308                     6,042                        (62)
 Ratios:
 FFO to Net debt(2,3,4◊)              1090.6%                   282.3%                                  286
 Net debt to Adjusted EBITDA(3,4◊)                 0.07                      0.28                       (75)

1 Refer to basis of presentation on page 6.

2 Refer to page 10.

3 Includes $585 million (2021: $857 million) of Marketing related lease
liabilities.

4 H1 2022 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 67 for
definitions and reconciliations and to note 3 of the financial statements for
reconciliation of Adjusted EBIT/EBITDA.

ENERGY MARKET VOLATILITY and HIGH prices drive record first half earnings

-       Elevated energy market dislocation, volatility, risk and supply
disruption, led to record prices for many coal and gas benchmarks and physical
premia, underpinning a $10.3 billion increase in Group Adjusted EBITDA to
$18.9 billion

-       Industrial Adjusted EBITDA increased $8.4 billion to $15.0
billion period-on-period, benefitting primarily from record coal prices,
augmented by the incremental 66.7% contribution from Cerrejón, acquired in
January 2022

-       Marketing Adjusted EBIT more than doubled to $3.7 billion, with
energy products performing exceptionally well amid the complex, volatile and
elevated market risk backdrop, characterised by extreme dislocations and price
movements

-       We currently expect more normal Marketing conditions to prevail
in the second half of the year

Industrial unit costs HIGHER, primarily due to the broad INFLATIONARY
environment and lower by-product credits

-       H1 unit costs were: Copper 54¢/lb, zinc 9¢/lb (48¢/lb
ex-gold), nickel (ex Koniambo) 370¢/lb and thermal coal $75.4/t

-       Full year estimated unit costs: Copper 93¢/lb, zinc 29¢/lb
(63¢/lb ex-gold), nickel (ex Koniambo) 359¢/lb and thermal coal $79.4/t (all
including updated by-product credits, as appropriate)

-       H1 Industrial capex was $2.0 billion (H1 2021: $1.8 billion);
full year guidance unchanged at $5.4 billion

income for the period attributable to equity holders of $12.1 billion

-       Including a $1.5 billion gain on acquiring the remaining 66.67%
interest in Cerrejón and disposal of Ernest Henry

Strong balance sheet

-       Allied to the record EBITDA, our net working capital
significantly increased during the period, with some $5 billion invested into
Marketing, primarily Energy, in line with the materially higher oil, gas and
coal prices, and their elevated volatilities

-       Despite the working capital build, significant cash was
generated during the half, which reduced Net funding and Net debt to $28.0
billion and $2.3 billion respectively from prior period levels of $30.8
billion and $6.0 billion.

-       Period-end Net debt of $2.3 billion allows for "top-up" returns
under our shareholder returns framework, where Net debt is managed around a
$10 billion cap, with sustainable deleveraging below the cap periodically
returned to shareholders

-       Announced today "top-up" shareholder returns of $4.5 billion,
comprising a $1.45 billion special distribution ($0.11/share) and a $3.0
billion share buyback (c.$0.23 per share)

-       Total shareholder returns for 2022 of c.$8.5 billion, including
the $3.4 billion base distribution and $0.6 billion buyback announced in
February 2022

-       Spot illustrative free cash flow generation of c.$18 billion
from Adjusted EBITDA of c.$32.3 billion.

 

To view the full report please click
https://www.glencore.com/dam/jcr:507b9273-f06c-4362-970c-3a1c8be272d6/GLEN-2022-Half-Year-Report.pdf
(https://www.glencore.com/dam/jcr:507b9273-f06c-4362-970c-3a1c8be272d6/GLEN-2022-Half-Year-Report.pdf)

For further information please contact:

Investors

Martin Fewings                 t: +41 41 709 2880       m: +41 79
737 5642               martin.fewings@glencore.com
(mailto:martin.fewings@glencore.com)

Media

Charles Watenphul          t: +41 41 709 2462       m: +41 79 904
3320               charles.watenphul@glencore.com
(mailto:charles.watenphul@glencore.com)

www.glencore.com (http://www.glencore.com)

Glencore LEI: 2138002658CPO9NBH955

Please refer to the end of this document for disclaimers including on
forward-looking statements.

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. Through a network
of assets, customers and suppliers that spans the globe, we produce, process,
recycle, source, market and distribute the commodities that enable
decarbonisation while meeting the energy needs of today.

Glencore companies employ around 135,000 people, including contractors. With a
strong footprint in over 35 countries in both established and emerging regions
for natural resources, our marketing and industrial activities are supported
by a global network of more than 40 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 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.

Glencore recognises our responsibility to contribute to the global effort to
achieve the goals of the Paris Agreement. Our ambition is to be a net zero
total emissions company by 2050. In August 2021, we increased our medium-term
emission reduction target to a 50% reduction by 2035 on 2019 levels and
introduced a new short-term target of a 15% reduction by 2026 on 2019 levels.

 

Important notice concerning disclaimers including on 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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