REG - Glencore PLC - Preliminary Results 2023

GlencoreAnnouncement

21/02/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240221:nRSU8304Da&default-theme=true

RNS Number : 8304D  Glencore PLC  21 February 2024

NEWS RELEASE

Baar, 21 February 2024

Preliminary Results 2023

Highlights

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

"Against the backdrop of a rebalancing and normalisation of international
energy trade flows, our Marketing and Industrial segments posted a lower,
albeit healthy, earnings performance in 2023, delivering Group Adjusted EBITDA
of $17.1 billion, cash generated by operating activities of $15.1 billion and
Net income attributable to equity holders of $4.3 billion.

"Aided by healthy operational cash generation, after funding $5.6 billion of
net capex and $10.1 billion of shareholder returns, the 2023 year-end Net debt
outturn was contained to $4.9 billion vs $0.1 billion in 2022. With a Net
debt/Adjusted EBITDA of 0.29x, we continue to enjoy significant financial
headroom and strength.

"For 2024, basis 2023 cash flows, we are recommending to shareholders a $0.13
per share (c.$1.6 billion) base cash distribution, comprising $1 billion from
Marketing cash flows and 25% ($0.6 billion) of Industrial attributable cash
flows.

This distribution, along our shareholder return journey, must be
contextualised by the significant announcement in November 2023 that we had
entered into a binding agreement with Teck Resources Limited (Teck) to acquire
a 77% effective interest in its steelmaking coal business, Elk Valley
Resources (EVR) for $6.93 billion in cash. These are world-class assets,
expected to meaningfully complement our existing thermal and steelmaking coal
production in Australia, Colombia, and South Africa. EVR also supports the
transition as an input into steel production needed for certain renewable
energy infrastructure. The transaction is subject to mandatory regulatory
approvals and, while closing could occur earlier, it is expected no later than
Q3 2024. The acquisition of EVR unlocks the potential, subject to shareholder
approval, for a value accretive demerger of our combined coal and carbon steel
materials business and, in support thereof, we advised that Glencore could
demerge the combined company, only once Glencore had sufficiently delevered
towards a revised $5 billion Net debt cap, expected to occur within 24 months
from close.

Over the past few years, our capital structure and credit profile has been
managed around a $10 billion Net debt cap, with sustainable deleveraging
(after base distribution) below the cap periodically returned to shareholders
via special distributions and buybacks. Under this framework, we announced
$20.3 billion of shareholder returns since 2020, comprising $10 billion of
base distributions and $10.3 billion of "top-up" returns. Following the EVR
announcement, we are now managing the balance sheet around a revised $5
billion Net Debt cap, alongside our continued commitment to minimum strong
BBB/Baa ratings.

Although there are no "top-up" returns at this point, the business is expected
to be highly cash generative at current spot commodity prices (spot
illustrative annualised free cash flow generation of c.$5.2 billion from
Adjusted EBITDA of c.$15.0 billion), which augers well for top-up returns to
recommence in the future.

"As the world moves towards a low-carbon economy, we remain focused on
supporting the energy needs of today whilst investing in our transition
commodities portfolio. During 2023, we acquired a 30% equity stake in Alunorte
alongside a 45% equity stake in Mineracao Rio do Norte S.A., securing low
carbon and cost alumina units for our Marketing business. In copper, we
acquired the remaining 56.25% interest in the MARA brownfield copper project
in Argentina that we did not already own, as well as the balance of Polymet
shares (c.18%). Polymet formed a 50:50 JV with Teck, establishing the New
Range Copper Nickel venture in Minnesota. These additions, along with a near
doubling of El Pachon's resource, added more than 5 billion tonnes of resource
to our copper resource inventory in 2023.

"While we continue to remain focused on operating safely, responsibly and
ethically and creating sustainable long-term value for all our stakeholders,
the strength of our diversified business model, across industrial and
marketing, focusing on metals and energy, has again in 2023 proved itself
adept in a range of market conditions."

 

 US$ million                                                 2023                 2022                 Change %
 Key statement of income and cash flows highlights(1):
 Revenue                                                          217,829              255,984                  (15)
 Adjusted EBITDA(◊)                                                17,102               34,060                  (50)
 Adjusted EBIT(◊)                                                  10,392               26,657                  (61)
 Net income for the year attributable to equity holders             4,280               17,320                  (75)
 Earnings per share (Basic) (US$)                                    0.34                 1.33                  (74)
 Funds from operations (FFO)(2◊)                                    9,452               28,938                  (67)
 Distributions to equity holders and purchase of own shares        10,130                7,539                   34

1 Refer to basis of presentation on page 7.

2 Significantly impacted in 2023, having absorbed the lag effect of settlement
in H1 2023 of $2.7 billion of 2022 final income tax payments in Australia and
Colombia.

◊ 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 122 for
definitions and reconciliations and to note 2 of the financial statements for
reconciliation of Adjusted EBIT/EBITDA.

 

 US$ million                         31.12.2023           31.12.2022             Change %
 Key financial position highlights:
 Total assets                             123,869              132,583                     (7)
 Total equity                              38,237               45,219                    (15)
 Net funding(◊)                            31,062               27,500                     13
 Net debt(◊)                                4,917                   75                   n.m.

 Ratios:
 Net debt to Adjusted EBITDA(◊)              0.29                 0.00                   n.m.

◊ 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 122 for
definitions and reconciliations and to note 2 of the financial statements for
reconciliation of Adjusted EBIT/EBITDA.

Strong financial performance

-       $17.1 billion Adjusted EBITDA, down 50% year-on-year (y/y),
primarily reflecting the rebalancing and normalisation of international energy
trade flows, with coal and LNG, and to a lesser extent, oil prices materially
declining

-       Net income, pre-significant items (see page 9): $6.7 billion,
down 65%

-       Post significant items, Net income attributable to equity
holders was $4.3 billion, down 75%. Significant items, mainly comprising
impairments, reflect lower cobalt price assumptions impacting Mutanda and
macro assumption revisions at several zinc assets

-       Net cash purchase and sale of PP&E: $5.6 billion, up 22%

-       Proposed $0.13/share base distribution ($1.6 billion), in
respect of 2023 cash flows

industrial asset results

-       Industrial Assets Adjusted EBITDA $13.2 billion, down 52%,
primarily reflecting lower coal earnings with the significant reduction in
energy prices in 2023

-       Metals $5.4 billion, down 41%, reflecting lower realised cobalt,
nickel and zinc prices, and reduced volumes; Energy $8.5 billion, down 55%,
mainly due to significantly lower coal prices

-       Unit cash costs: Cu 163¢/lb (+83¢ y/y), with c.50c/lb of
reduced by-product credits (cobalt being the largest contributor) and a 10c/lb
non-cash inventory adjustment; Zn 49¢/lb (-11¢ y/y); Ni 871¢/lb (+240¢
y/y), including 24c/lb of Koniambo expensed capex; coal $70.5/t (-$12.1/t) at
a $70.2/t margin. 2024 unit cash costs projected to be lower across all of Cu,
Zn, Ni, and coal

marketing RESULTS

-       Marketing Adjusted EBIT $3.5 billion, down 46% y/y

-       Energy Adjusted EBIT: $1.7 billion (-67%), in a return to a more
stable market environment, following the extreme market volatility levels,
dislocations and complexities exhibited during 2022

-       Metals Adjusted EBIT: $1.7 billion (+5%), reflecting broadly
consistent physical marketing conditions for many of our most important
commodities

-       Viterra EBITDA was $2.1 billion (2022: $2.0 billion), while
Glencore's equity accounted share of Viterra declined to $321 million ($494
million in 2022).

robust balance sheet

-       Net debt to Adjusted EBITDA of 0.29x

-       Available committed liquidity of $12.9 billion; executed
additional $3 billion 1 year committed liquidity facility in February 2024.
Bond maturities capped at c.$3 billion in any given year

climate ambition

-       Extensive engagement with shareholders during the year on a
range of climate matters, including seeking investors' views on anticipated
changes in our updated Climate Action Transition Plan that will be put to
shareholders at the 2024 AGM.

-       There was broad support for our climate strategy, recognising
the importance of maintaining a strategy that remains resilient to the risks
and opportunities of the evolving energy transition, and encouragement to
continue making progress towards our ambition of achieving net zero industrial
emissions by 2050, subject to a supportive policy environment.

-       The principal areas of shareholder interest included a
comparison of our targets and ambition to various relevant IEA scenarios,
understanding progress on industrial emissions reduction between our
short-term 2026 target and medium-term 2035 target and integration of the
recently announced EVR acquisition into the climate strategy.

-       We will, among other actions, maintain our commitment to
reducing our total industrial emissions footprint and report on progress
against our targets and ambition, update our assessment of the resilience of
our portfolio and expand analysis of our targets and ambition against a range
of climate policy scenarios.

-       We intend to publish our updated Climate Action Transition Plan
in March 2024 and report on progress against our industrial emission reduction
targets and ambition in our 2023 Annual Report.

 

To view the full report please click here:
https://www.glencore.com/.rest/api/v1/documents/static/7e55cef8-54b5-47c5-8a48-171d685e319d/GLEN-2023-Preliminary-Results.pdf
(https://www.glencore.com/.rest/api/v1/documents/static/7e55cef8-54b5-47c5-8a48-171d685e319d/GLEN-2023-Preliminary-Results.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

This announcement contains inside information.

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

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.

Cautionary statement regarding forward-looking information

Certain descriptions in this document are 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; expectations regarding financial performance,
results of operations and cash flows, 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, in
particular the proposed acquisition of a majority stake of EVR from Teck
Resources Limited and potential subsequent demerger of the combined coal and
carbon steel materials business); 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 and commodity prices;
development, efficacy and adoption of new or competing technologies; changing
or divergent preferences of our stakeholders; 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; timing, quantum and nature of certain acquisitions and
divestments; health, safety, environmental or social performance incidents;
labor shortages or workforce disruptions; natural catastrophes or adverse
geological conditions, including, without limitation, the physical risks
associated with climate change; effects of global pandemics and outbreaks of
infectious disease; the outcome of litigation or enforcement or regulatory
proceedings; the effect of foreign currency exchange rates on market prices
and operating costs; actions by governmental authorities, such as changes in
taxation or regulation or changes in the decarbonisation policies and plans of
other countries; changes in economic and financial market conditions generally
or in various counties or regions; political or geopolitical uncertainty; and
wars, political or civil unrest, acts of terrorism, cyber attacks or sabotage.

Readers, including, without limitation, investors and prospective investors,
should review and consider 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 all potential risks and opportunities and disclose these and any
potential impacts with precision. 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 or that 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 document discusses in certain instances and the inherent uncertainty in
possible policy, market and technological developments in the future.

No statement in this document is intended as any kind of forecast (including,
without limitation, a profit forecast or a profit estimate), guarantee or
prediction of future events or performance and past performance cannot be
relied on as a guide to future performance.

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.

Cautionary statement regarding climate strategy

Glencore operates in a dynamic and uncertain market and external environment.
Plans and strategies can and must adapt in response to dynamic market
conditions, changing preference of our stakeholders, joint venture decisions,
changing weather and climate patterns, new opportunities that might arise or
other changing circumstances. Investors should not assume that our climate
strategy 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. Our strategy will also necessarily be impacted by changes
in our business, such as the proposed acquisition of EVR and potential
demerger of the combined coal and carbon steel materials business.

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. GHG
emissions calculation and reporting methodologies may change or be
progressively refined over time resulting in the need to restate previously
reported data. 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 is
available on our website.

Sources

Certain statistical and other information included in this document is sourced
from publicly available third-party sources. This information has not been
independently verified and presents the view of those third parties, and 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
document.

Information preparation

In preparing this document, Glencore has made certain estimates and
assumptions that may affect the information presented. Certain information is
derived from management accounts, is unaudited and based on information
Glencore has available to it at the time. Figures throughout this document are
subject to rounding adjustments. The information presented is subject to
change at any time without notice and we do not intend to update this
information except as required.

This document contains alternative performance measures which reflect how
Glencore's management assesses the performance of the Group, including results
that exclude certain items included in our reported results. Further details
and information needed to reconcile such information to our reported results
can be found in the section of this report entitled "Alternative Performance
Measures". For further information on how we calculate certain non-financial
metrics such as fatalities at our industrial operations, please refer to our
latest Basis of Reporting, which is available on our website.

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 document.

Other information

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.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  FR BIGDDIGDDGSG