2021 Half-Year Report

Baar, Switzerland
5 August 2021


Highlights

Glencore’s Chief Executive Officer, Gary Nagle, commented:
“I am pleased to report strong progress and group performance over the first half of 2021. Our Industrial assets recorded a much improved safety performance, our strengthened climate commitments are amongst the most ambitious in the sector, group half-year Adjusted EBITDA of $8.7 billion was a record, Net debt targets were achieved early and shareholder returns have been topped up.

“Following Covid-19’s severe global impacts in early 2020, the subsequent economic recovery has seen prices of most of our commodities surging to multi-year highs amid accelerating demand and lingering supply constraints. Fiscal and monetary stimulus, successful vaccine roll-outs and increasing momentum in relation to decarbonisation of energy systems should continue to underpin sector sentiment going forward.

“Our marketing business excelled in this environment, recording Adjusted EBIT of $1.8 billion. In contrast to the outsized oil earnings that dominated last year’s record first-half results, strong trading performances were delivered by all key commodity teams during this year. In the Industrial business, Adjusted EBITDA of $6.6 billion was up 152%, benefiting from strong metals prices and expanded mining margins. While our coal business was impacted by relatively weak pricing and lower volumes earlier in the year, we anticipate a significantly improved finish to 2021, buoyed by the strong recovery in both thermal and coking coal prices from Q2.

“Against such first-half backdrop, cash generation was strong, with FFO almost doubling to $7.3 billion, and Net debt of $10.6 billion correspondingly moving to the lower end of our target range. Accordingly, and aided by the robust cashflow currently being generated within the business, I am pleased to announce additional shareholder returns, comprising a c.$0.5 billion special cash distribution ($0.04/share) for payment in September and a $650 million share buyback to be completed by the release of our full year results next year. This overall top-up lifts planned 2021 shareholder returns to c.$2.8 billion.

“The strength of Glencore’s enviable portfolio today reflects Ivan’s persistent pursuit of value creation and his vision in unlocking the enhanced benefits and synergies from combining a large diversified suite of Industrial assets with related Marketing activities. Our company is ideally positioned in terms of commodity mix and business model and I look forward to working with all our stakeholders to realise our ambition of meeting the expected resource needs of the future, while creating sustainable long-term value.”

US$ million

H1 2021

H1 2020

Change %

2020

Key statement of income and cash flows highlights1:

       
Revenue                 93,805                  70,961                          32                142,338
Adjusted EBITDA◊                   8,654                   4,833                         79                   11,560
Adjusted EBIT◊                    5,305                    1,472                       260                    4,416
Net income/(loss) attributable to equity holders                     1,277                   (2,600 )                     n.m.                    (1,903 )
Earnings/(loss) per share (Basic) (US$)                      0.10                     (0.20 )                     n.m.                      (0.14 )
Funds from operations (FFO)2                    7,310                   3,686                         98                    8,325
Cash generated by operating activities before working capital changes                     7,181                    4,317                         66                   8,568
Net purchase and sale of property, plant and equipment2                    1,767                    1,700                            4                     3,921

 

US$ million

30.06.2021

31.12.2020

Change %

Key financial position highlights:

 

 

 

Total assets

122,419 118,000 4

Net funding2,3

31,854 35,428 (10)

Net debt2,3

10,624 15,844 (33)

Ratios:

 

 

 

FFO to Net debt2,3,4

112.5% 52.5% 114

Net debt to Adjusted EBITDA3,4

0.69 1.37 (50)

1      Refer to basis of presentation on page 4.
2     Refer to page 8.
3     Includes $1,005 million (2020: $652 million) of Marketing related lease liabilities.
4     H1 2021 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 64 for definitions and reconciliations and to note 3 of the financial statements for reconciliation of Adjusted EBIT/EBITDA.

Higher commodity prices drive Six month adjusted EBITDA to $8.7 billion

  • Industrial Adjusted EBITDA of $6.6 billion (H1 2020: $2.6 billion) reflects a significantly improved Adjusted EBITDA mining margin of 38% (H1 2020: 22%)
  • Strong Marketing Adjusted EBIT performance of $1.8 billion, albeit down $220 million (11%) on H1 2020, reflecting the exceptional oil trading conditions in the prior period. All key commodity departments materially contributed
  • Full year Marketing Adjusted EBIT expected at the top end of our long-term $2.2-3.2 billion p.a. range

Industrial unit costs in line with expectations

  • H1 unit costs were: Copper 85¢/lb, zinc -18¢/lb (18¢/lb ex-gold), nickel (ex Koniambo) 254¢/lb and thermal coal $54/t
  • Full year estimated unit costs: Copper 80¢/lb, zinc -13¢/lb (28¢/lb ex-gold), nickel (ex Koniambo) 277¢/lb and thermal coal $55/t (all including by-product credits as appropriate)
  • H1 Industrial capex was $1.8 billion (H1 2020: $1.8 billion); full year expected around $5.0 billion

Net income attributable to equity holders of $1.3 billion

  • Stated after the required accounting recycling to the statement of income of Mopani’s non-controlling interests upon its disposal and a non-cash impairment of Koniambo ($625 million)

Net debt of $10.6 billion (including $1.0 billion of Marketing-related lease liabilities)

  • Towards the low end of our $10-16 billion target range; well below our current c.1x Net debt/ Adjusted EBITDA target
  • Continued healthy cashflow generation expected for balance of 2021, basis current performance and prices
  • Available committed liquidity of $9.3 billion at 30 June 2021
  • Announced today an additional cash distribution of c. $530 million ($0.04/share) and a $650 million share buyback
  • Brings total shareholder returns for 2021 to $2.8 billion, being the 12¢/share base distribution announced in February and the above “top-up” elements

To view the full report please click https://www.glencore.com/dam/jcr:40ca2cbb-3bef-4564-8395-45db79f00c59/GLEN-2021-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

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 60 responsibly-sourced commodities that advance everyday life. The Group's operations comprise around 150 mining and metallurgical sites and oil production assets.

With a strong footprint in over 35 countries in both established and emerging regions for natural resources, Glencore's industrial activities are supported by a global network of more than 30 marketing 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's companies employ around 135,000 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. Our ambition is to be a net zero total emissions company by 2050.

Important notice concerning this document including 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", "estimates", "aims", "forecasts", "risks", "intends", "positioned", "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 the 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 form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any securities. 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.