REG - Glencore PLC - 2023 Half-year Report

GlencoreAnnouncement

08/08/2023 07:00

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RNS Number : 5619I  Glencore PLC  08 August 2023

NEWS RELEASE

Baar, 8 August 2023

 

2023 Half-Year Report

Highlights

 

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

"The strength of our diversified business model across industrial and
marketing, focusing on metals and energy, has again proved itself adept in a
range of market conditions.

"Against the backdrop of a normalisation of commodity market imbalances and
volatility, primarily across the energy spectrum, our Marketing and Industrial
segments posted a healthy earnings performance, delivering Group Adjusted
EBITDA of $9.4 billion, cash generated by operating activities of $8.4 billion
and Net income attributable to equity holders of $4.6 billion.

"Reflecting these solid headline earnings, together with a $3.7 billion
release of net working capital, including $1.4 billion of readily marketable
inventories, net funding remained static over the period, after disbursing
$5.2 billion of shareholder returns, $2.5 billion of net capital expenditure
and $2.7 billion of final 2022 tax payments in Australia and Colombia. Net
debt finished the period at

$1.5 billion.

"Our shareholder returns framework of managing Net debt, in the ordinary
course of business, around a $10 billion cap, with deleveraging periodically
returned to shareholders, informed today's announcement of additional "top-up"
returns of c.$2.2 billion, lifting total announced shareholder returns this
year to c.$9.3 billion.

"As the world moves towards a low-carbon economy, we remain focused on
supporting the energy needs of today whilst investing in our transition metals
portfolio. Over the year to date, we committed $1.25 billion, mainly on
purchasing the balance of the large, long-life MARA copper project, not
already held by Glencore, and acquiring a minority stake in Alunorte, a world
class alumina refinery, thereby providing Glencore with long-term exposure to
lower-quartile carbon alumina.

"We look to the future confident that we have the right pathway to succeed in
a Net-zero economy and create sustainable long-term value for all
stakeholders, while operating in a responsible and ethical manner across all
aspects of our business."

 

 US$ million                                               H1 2023           H1 2022           Change %            2022
 Key statement of income and cash flows highlights(1):
 Revenue                                                        107,415           134,435               (20)            255,984
 Adjusted EBITDA(◊)                                               9,397            18,918               (50)             34,060
 Adjusted EBIT(◊)                                                 6,305            15,415               (59)             26,657
 Net income for the period attributable to equity holders         4,568            12,085               (62)             17,320
 Earnings per share (Basic) (US$)                                  0.36              0.92               (61)               1.33

 

 US$ million                         30.06.2023        31.12.2022         Change %
 Key financial position highlights:
 Total assets                             121,754           132,583                 (8)
 Total equity                              41,173            45,219                 (9)
 Net funding(2◊)                           27,533            27,500                  0
 Net debt(2◊)                               1,542                75              1,956
 Ratios:
 Net debt to Adjusted EBITDA(3◊)             0.06              0.00                n.m

1 Refer to basis of presentation on page 7.

2 Refer to page 10.

3 H1 2023 ratio based on last 12 months' 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 73 for
definitions and reconciliations and to note 3 of the financial statements for
reconciliation of Adjusted EBIT/EBITDA.

 

2023 HALF-YEAR FINANCIAL SCORECARD

•   Marketing Adjusted EBIT of $1.8 billion, annualising above our
$2.2-3.2 billion p.a. long-term guidance range, down 52% period-on-period from
last year's exceptionally strong performance

•   Industrial Assets Adjusted EBITDA of $7.4 billion, down 51%, impacted
primarily by lower pricing, particularly in coal, as well as inflationary cost
impacts across the asset base, much of it having lagged and been heavily
influenced by the surge in energy prices during 2022.

•   $9.4 billion Adjusted EBITDA, down 50%, reflecting the normalisation
of primarily energy market imbalances and volatility from the extreme levels
seen in 2022

•   Net income attributable to equity holders was $4.6 billion ($12.1
billion in H1 2022), down 61%

•   Adjusted EBITDA mining margins were 25% in our metals operations and
50% in our energy operations, compared to 43% and 66% respectively during H1
2022

INVESTING IN TRANSITION METALS

•   $1.25 billion of recent investment commitments in transition metals,
comprising:

- $700 million to acquire a 30% equity stake in Alunorte and a 45% equity
stake in Mineracão Rio do Norte S.A., from Norsk Hydro;

- $475 million to acquire the remaining 56.25% interest in the MARA copper
project, not already owned, from Pan American Silver, taking Glencore to 100%
ownership;

- $73 million to acquire the remaining 18% in Polymet not already owned, a
50:50 JV partner in the New Range Copper Nickel venture with Teck Resources in
Minnesota.

BALANCE SHEET

•   After consideration of near-term cash commitments and potential
M&A, period-end Net debt of $1.5 billion, supported

c.$2.2 billion of "top-up" shareholder payments, lifting total 2023 announced
shareholder returns to c.$9.3 billion.

•   This additional return will be effected by way of a c.$1 billion
($0.08 per share) special cash distribution and a new $1.2 billion buyback
programme intended to run until release of our full year results in February
2024. The special cash distribution of

$0.08 per share will be paid alongside the $0.22 per share second tranche of
the cash distribution announced in February 2023

•   Available committed liquidity of $12.9 billion; bond maturities
maintained around a cap of $3 billion in any given year

•   In June 2023, Glencore agreed to dispose of its interest in Viterra in
a cash and shares transaction with Bunge. For its 50% stake, Glencore will
receive $1.0 billion in cash and c.$3.1 billion in Bunge stock (basis Bunge's
stock price at the date of announcement, but worth c.$3.8 billion (up 23%) as
of 4 August 2023). The merger is expected to close in mid-2024.

•   Spot illustrative annualised free cash flow generation of c.$7.3
billion from Adjusted EBITDA of c.$17.4 billion

PROGRESSING OUR CLIMATE STRATEGY

•   Shareholders gave broad support for the progress of our Climate Action
Transition Plan at the 2023 AGM, with c.70% voting in favour

•   We recognise that some shareholders chose not to support this
resolution and we will continue to engage with shareholders so as to ensure
their views are fully understood

•   We will publish an update on this engagement, in accordance with the
UK Corporate Governance Code, within six months of the 2023 AGM

 

To view the full report please click
https://www.glencore.com/.rest/api/v1/documents/static/a6349da6-3d11-4662-9107-28e19667d236/GLEN-2023-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

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 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 support decarbonisation while meeting the
energy needs of today.

With around 140,000 employees and contractors and 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.

We recognise our responsibility to contribute to the global effort to achieve
the goals of the Paris Agreement by decarbonising our own operational
footprint. We believe that we should take a holistic approach and have
considered our commitment through the lens of our global industrial emissions.
Against a 2019 baseline, we are committed to reducing our Scope 1, 2 and 3
industrial emissions by 15% by the end of 2026, 50% by the end of 2035 and we
have an ambition to achieve net zero industrial emissions by the end of 2050.
For more detail see our 2022 Climate Report on the publication page of our
website at glencore.com/publications.

 

Important notice concerning this report including forward-looking statements

Given the focus of this document, it is necessarily oriented towards future
events and therefore contains statements that are, or may be deemed to be,
"forward-looking statements" which are prospective in nature. Such statements
may include (without limitation)statements in respect of trends in commodity
prices and currency exchange rates; demand for commodities; reserves and
resources and production forecasts; expectations, plans, strategies and
objectives of management; climate scenarios; sustainability performance
(including, without limitation, environmental, social and governance) related
goals, ambitions, targets, intentions, visions, milestones and aspirations;
approval of certain projects and consummation of certain transactions
(including, without limitation, acquisitions and disposals); closures or
divestments of certain assets, operations or facilities (including, without
limitation, associated costs); capital costs and scheduling; operating costs
and supply of materials and skilled employees; financings;anticipated
productive lives of projects, mines and facilities; provisions and contingent
liabilities; and tax, legal and regulatory developments.

 

These forward-looking statements may be identified by the use of
forward-looking terminology, or the negative thereof including, without
limitation, "outlook", "guidance", "trend", "plans", "expects", "continues",
"assumes", "is subject to", "budget", "scheduled", "estimates", "aims",
"forecasts", "risks", "intends", "positioned", "predicts", "projects",
"anticipates", "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. The information in this document provides an insight into how
we currently intend to direct the management of our businesses and assets and
to deploy our capital to help us implement our strategy. The matters disclosed
in this document are a 'point in time' disclosure only. 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 conditions and discussions of strategy, and reflect
judgments, assumptions, estimates and other information available as at the
date of this document or the date of the corresponding planning or scenario
analysis process.

 

By their nature, forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to differ materially from any future event, results, performance,
achievements or other outcomes expressed or implied by such forward-looking
statements. Important factors that could impact these uncertainties include
(without limitation) those disclosed in the risk management section of our
latest Annual Report and Half-Year Report (which can each be found on our
website). These risks and uncertainties may materially affect the timing and
feasibility of particular developments. Other factors which impact risks and
uncertainties 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; changes in environmental scenarios and related regulations, including
(without limitation) transition risks and the evolution and development of
the global transition to a low carbon economy; recovery rates and other
operational capabilities; health, safety, environmental or social performance
incidents; natural catastrophes or adverse geological conditions, including
(without limitation) the physical risks associated with climate change; the
outcome of litigation or enforcement or regulatory proceedings; the effect of
foreign currency exchange rates on market prices and operating costs; actions
by governmentalauthorities, such as changes in taxation or regulation or
changes in the decarbonisation plans of other countries; and political
uncertainty.

Readers, including (without limitation) investors and prospective investors,
should review and take into account these risks and uncertainties (as well as
the other risks identified in this document) when considering the information
contained in this document. Readers should also note that the high degree of
uncertainty around the nature, timing and magnitude of climate-related risks,
and the uncertainty as to how the energy transition will evolve, makes it
difficult to determine and disclose the risks and their potential impacts with
precision. Neither Glencore nor any of its affiliates, associates, employees,
directors, officers or advisers, provides any representation, warranty,
assurance or guarantee that the occurrence of the events, results,
performance, achievements or other outcomes expressed or implied in any
forward-looking statements in this document will actually occur. Glencore
cautions readers against reliance on any forward-looking statements contained
in this document, particularly in light of the long-term time horizon which
this report discusses and the inherent uncertainty in possible policy, market
and technological developments in future.

No statement in this document is intended as any kind of forecast (including,
without limitation, a profit forecast or a profit estimate), guarantees or
predictions of future events or performance and past performance cannot be
relied on as a guide to future performance. Neither Glencore nor any of its
affiliates, associates, employees, directors, officers or advisers, provides
any representation, warranty, assurance or guarantee as to the accuracy,
completeness or correctness, likelihood of achievement or reasonableness of
any forward-looking information contained in this document.

Glencore operates in a dynamic and uncertain market and external environment.
Plans and strategies can and must adapt in response to dynamic market
conditions, joint venture decisions, new opportunities that might arise or
other changing circumstances. Investors should not assume that our strategy on
climate change will not evolve and be updated as time passes. Additionally, a
number of aspects of our strategy involve developments or workstreams that are
complex and may be delayed, more costly than anticipated or unsuccessful for
many reasons, including (without limitation) reasons that are outside of
Glencore's control.

There are inherent limitations to scenario analysis and it is difficult to
predict which, if any, of the scenarios might eventuate. Scenario analysis
relies on assumptions that may or may not be, or prove to be, correct and that
may or may not eventuate and scenarios may also be impacted by additional
factors to the assumptions disclosed. Given these limitations we treat these
scenarios as one of several inputs that we consider in our climate strategy.

Due to the inherent uncertainty and limitations in measuring greenhouse gas
(GHG) emissions and operational energy consumption under the calculation
methodologies used in the preparation of such data, all CO(2)e emissions and
operational energy consumption data or volume references (including, without
limitation, ratios and/or percentages) in this document are estimates. There
may also be differences in the manner that third parties calculate or report
such data compared to Glencore, which means that third-party data may not be
comparable to Glencore's data. For information on how we calculate our
emissions and operational energy consumption data, see our latest Basis of
Reporting, Climate Report and Extended ESG Data, which can be found on our
website.

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.

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. Certain statistical
and other information about Glencore included in this document is sourced from
publicly available third-party sources. As such it has not been independently
verified and presents the view of those third parties, but may not necessarily
correspond to the views held by Glencore and Glencore expressly disclaims any
responsibility for, or liability in respect of, and makes no representation or
guarantee in relation to, such information (including, without limitation, as
to its accuracy, completeness or whether it is current). Glencore cautions
readers against reliance on any of the industry, market or other third-party
data or information contained in this report.

Subject to any terms implied by law which cannot be excluded, Glencore accepts
no responsibility for any loss, damage, cost or expense (whether direct or
indirect) incurred by any person as a result of any error, omission or
misrepresentation in information in this report.

The companies in which Glencore plc directly and indirectly has an interest
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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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