TIDMGLEN
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.$8.5 billion.
"Looking ahead, tightening financial conditions and a
deteriorating macroeconomic environment present some uncertainty
for commodity markets through the second half of the year. However,
with few short-term solutions to rebalance global energy markets,
coal and LNG prices look set to remain elevated during this period,
particularly given the current challenge of securing sufficient and
reliable energy supply for the Northern hemisphere winter
ahead.
"For metals, the outlook is more complex, balancing supply
risks, amid labour, water and energy shortages, supply chain
disruptions, growing sovereign risk uncertainty and rising costs,
against likely weakening end-use markets ex-China. There are some
recent signs of China recovering from its Q2 trough, which could
help to offset potentially weaker conditions in other key consuming
markets.
"The combined strength of our diversified business model across
metals and energy industrial and marketing positions has proved
itself adept in all market conditions, which should allow us to
both successfully navigate the shorter-term challenges that may
arise, as well as meet the resource needs of the future. I would
like to thank all our employees for their efforts and tremendous
contribution during these turbulent times and as always, we remain
focused on creating sustainable long-term value for all our
stakeholders."
Change
US$ million H1 2022 H1 2021 % 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$) 0.92 0.10 820 0.38
Funds from operations (FFO)(2) 15,425 7,310 111 17,057
Cash generated by operating activities
before working capital changes, interest
and tax 18,290 7,181 155 16,725
Change
US$ million 30.06.2022 31.12.2021 %
----------------------------------- ----------- ---------- ------
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 54c/lb, zinc 9c/lb (48c/lb
ex-gold), nickel (ex Koniambo) 370c/lb and thermal coal $75.4/t
- Full year estimated unit costs: Copper 93c/lb, zinc 29c/lb
(63c/lb ex-gold), nickel (ex Koniambo) 359c/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
For further information please contact:
Investors
Martin Fewings t: +41 41 709 2880 m: +41 79 737 5642 martin.fewings@glencore.com
Media
Charles Watenphul t: +41 41 709 2462 m: +41 79 904 3320 charles.watenphul@glencore.com
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",
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"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 t he 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
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solicitation of any offer to purchase or subscribe for any
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The companies in which Glencore plc directly and indirectly has
an interest are separate and distinct legal entities. In this
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