2016 Half-Year Report
Highlights
Strong and improving cash generation despite lower commodity prices and production volumes
- 2016 first half Adjusted EBITDA of $4.0 billion, down 13%
- Funds from operations of $2.8 billion, down 21%
- Capital expenditure of $1.6 billion, down 51%, comfortably offsetting the reduced FFO
Industry-leading cost positions
- Outstanding first-half operational unit cost performance in our key commodities: copper 97c/lb, zinc -3c/lb (15c/lb ex-gold), nickel 246c/lb and thermal coal $37/t
- Full year unit cost estimates have been reduced to reflect stronger than expected cost improvements over the year to date
Marketing remains a unique, defensive earnings driver
- Marketing Adjusted EBIT increased by 14% to $1.2 billion, supported by strong contributions from Metals & Minerals
- Full year Adjusted EBIT guidance of $2.4-2.7 billion remains unchanged
Continued strong liquidity and balance sheet flexibility
- Committed available liquidity of $14.9 billion at 30 June 2016 ($15.2 billion at the end of 2015) comfortably covers our next three years of bond maturities
- Public market credit spreads and CDS have substantially normalised
Targeting even lower Net funding and Net debt of $31-32 billion and $16.5-17.5 billion by the end of 2016
- $2.3 billion reduction in Net funding and Net debt during the first half
- Agreed asset sales of $3.9 billion, well on track to deliver the targeted $4-5 billion - A diverse and material pool of asset sales’ processes continues
- Annualised free cash flow generation >$4.5 billion, based on Adjusted EBITDA of c.$10.5 billion at current spot commodity prices
Investors
Martin Fewings
t: +41 41 709 2880
m: +41 79 737 5642
Ash Lazenby
t: +41 41 709 2714
m: +41 79 543 3804
Media
Charles Watenphul
t: +41 41 709 2462
m: +41 79 904 3320
charles.watenphul@glencore.com
Glencore is one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 90 commodities. The Group's operations comprise around 150 mining and metallurgical sites, oil production assets and agricultural facilities.
With a strong footprint in both established and emerging regions for natural resources, Glencore's industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries.
Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, oil and food processing. We also provide financing, logistics and other services to producers and consumers of commodities. Glencore's companies employ around 160,000 people, including contractors.
Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative.
Ratios:
| FFO to Net debt | 24.9% | 25.6% | (3) |
| Net debt to Adjusted EBITDA | 2.91x | 2.98x | (2) |
| Adjusted EBITDA to net interest | 5.41x | 6.24x | (13) |
Key financial position highlights:
| US$ million | 30.06.2016 | 31.12.2015 | Change % |
|---|---|---|---|
| Total assets | 127,854 | 128,485 | - |
| Net funding | 38,983 | 41,245 | (5) |
| Net debt | 23,580 | 25,889 | (9) |
Key statement of income and cash flows highlights
| US$ million | H1 2016 | H1 2015 | Change % | 2015 |
|---|---|---|---|---|
| Adjusted EBITDA | 4,020 | 4,611 | (13) | 8,694 |
| Adjusted EBIT | 875 | 1,412 | (38) | 2,172 |
| Net income attributable to equity holders of the parent presignificant items | 300 | 882 | (66) | 1,342 |
| Net loss attributable to equity holders of the parent | (369) | (676) | n.m. | (4,964) |
| Funds from operations (FFO) | 2,762 | 3,487 | (21) | 6,615 |
| Capital expenditure | 1,571 | 3,189 | (51) | 5,957 |
2016 Half-Year Report
24 August, 2016
Glencore’s Chief Executive Officer, Ivan Glasenberg, commented: “Since we announced our measures to reduce debt levels last September, we have made considerable progress towards achieving our goals. Supporting these targets, our industrial assets are demonstrating industry-leading cost and cashflow performances, while the resilience of our Marketing business has again been demonstrated, with a 14% increase in its first half Adjusted EBIT to $1.2 billion. “We have already largely achieved our asset disposals target of $4-5 billion with a diverse and material pool of asset sales’ processes also on-going. Our divestment strategy remains one of maximising value for shareholders through identifying assets where overall Glencore franchise positioning, optionality and value is substantially preserved or even enhanced. The Glencore Agri stake sale, for example, positions it for the industry’s inevitable consolidation in the years to come. We remain confident and focussed on achieving even lower than previously indicated net funding and net debt levels by the end of this year. “After a difficult start to the year, the more constructive tone of markets in recent months has helped support the pricing of many of our key commodities. While we are highly cash generative at current spot prices, we remain mindful that underlying markets continue to be volatile. We are alert to and have a high degree of proven flexibility in adapting to changing market conditions.”