2018 Half-Year Report

Baar, 8 August 2018

 

To view the full report please click here: 
http://www.glencore.com/dam/jcr:0895391c-ffb4-4b2d-8f1e-ffc77574f8f4/GLEN-2018-Half-Year-Report-FINAL.pdf

Highlights

Glencore’s Chief Executive Officer, Ivan Glasenberg, commented: “The strength of our diversified business model and commodity mix is once again demonstrated with a 13% increase in net income and a 23% increase in Adjusted EBITDA to $8.3 billion.

“Against a volatile but favourable trading and commodity price environment, Marketing performed towards the upper end of its guidance range with a 12% increase in Adjusted EBIT to $1.5 billion. Our Industrial business recorded Adjusted EBITDA of $6.7 billion, up 26%, reflecting the highly competitive cost positions of our asset base.

“Cash generation remains strong, with FFO up 8% to $5.6 billion and our balance sheet healthy, with Net debt of $9 billion. In addition to the $2.85 billion of shareholder distributions announced earlier this year, we recently announced a $1 billion buy-back programme. 

“While broader market conditions are likely to remain volatile, confidence in our business prospects and current share trading levels point to near-term focus on deleveraging and shareholder returns / buybacks funded through cash generation. We remain focused on creating value for shareholders through the disciplined allocation of long-term capital.”

US$ million H1 2018 H1 2017 Change % 2017
Key statement of income and cash flows highlights1:
Net income attributable to equity holders 2,776 2,450 13 5,777
Adjusted EBITDA◊ 8,270 6,741 23 14,762
Adjusted EBIT◊ 5,119 3,801 35 8,552
Earnings per share (Basic) (US$) 0.19 0.17 12 0.41
Funds from operations (FFO)2◊ 5,625 5,201 8 11,556
Net cash generated by operating activities before working capital changes 6,805 5,599 22 11,866
Capital expenditure◊ 2,165 1,679 29 4,234

 

Table best viewed in landscape

US$ million 30.06.2018 31.12.2017 Change %
Key financial position highlights:
Total assets 134,464 135,593 (1)
Net funding2◊ 31,894 32,898 (3)
Net debt2◊ 8,997 10,673 (16)
Ratios:      
FFO to Net debt2,3◊ 133.2% 108.3%  
Net debt to Adjusted EBITDA3◊ 0.55x 0.72x  

 

Table best viewed in landscape

1     Refer to basis of preparation on page 5.
2    Refer to page 9.
3    H1 2018 and H1 2017 ratio 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 72 for definition and reconciliations and note 3 of the financial statements for reconciliation of Adjusted EBIT/EBITDA and capital expenditure.

Another strong financial performance

  • Adjusted EBITDA of $8.3 billion, up 23%; Adjusted EBIT of $5.1 billion, up 35%
  • Net income attributable to equity holders of $2.8 billion, up 13%; net income, pre-significant items up 40% to $3.3 billion
  • Funds from operations of $5.6 billion, up 8%
  • Continued balance sheet strength and flexibility: Net debt of $9.0 billion, down 16%
  • EPS of $0.19 per share, up 12%
  • 2nd instalment of the 2018 distribution of $1.4 billion ($0.10 per share) payable in September

 

Strong Marketing performance

  • Marketing Adjusted EBIT of $1.5 billion, up 12%
  • Strong performances from Metals and minerals and Energy products segments, up 17% and 23% respectively
  • Lower crop yields in key geographies reflected in weaker Agricultural products performance; stronger H2 expected

 

Industrial assets performance underpinned by higher prices and continued cost/asset optimisation

  • Industrial Adjusted EBITDA up 26% to $6.7 billion
  • Solid first-half mine cost/margin performances across the business (Cu: 88c/lb, Zn: -11c/lb (20c/lb ex Au), Ni: 177c/lb, Coal: $35/t margin at $50/t unit cash cost)
  • Copper and zinc mine costs higher than initial FY guidance primarily due to project ramp-up, lower by-product pricing, some modest energy cost inflation and H2 weighted production

 

Growth through selective M&A

  • Hunter Valley Operations large-scale premium thermal coal mine JV established in May (49% attributable to Glencore)
  • Hail Creek primarily coking coal acquisition from Rio Tinto completed on 1 August
  • Downstream oil investments in South Africa, Botswana and Brazil expected to complete in H2

 

Increasing returns to shareholders, funded by cash generation

  • 2018E distributions / buybacks now total $4.2 billion, comprising $2.85 billion distribution of 2017 cash flows, $0.3 billion H1 share trust purchases and $1.0 billion H2 buy-back programme
  • Confidence in own business prospects and current share trading levels point to near-term focus on deleveraging and shareholder returns/buybacks

 

For further information please contact:

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

Ash Lazenby
t: +41 41 709 2714
m: +41 79 543 3804
ash.lazenby@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

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 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 sectors. We also provide financing, logistics and other services to producers and consumers of commodities. Glencore's companies employ around 146,000 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.

Disclaimer
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.