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GLN - 2019 Half-Year Report
GLENCORE PLC
(Incorporated in Jersey under the Companies (Jersey) Law 1991)
(Registration number 107710)
JSE Share Code: GLN
LSE Share Code: GLEN
HKSE Share Code: 805HK
ISIN: JE00B4T3BW64
NEWS RELEASE
Baar, 7 August 2019
2019 Half-Year Report
Highlights
Glencore’s Chief Executive Officer, Ivan Glasenberg, commented: “Our performance in the first half reflected a
challenging economic backdrop for our commodity mix, as well as operating and cost setbacks within our ramp-
up/development assets. Adjusted EBITDA declined 32% to $5.6 billion.
“The rest of our business, however, remained strong and performed well. Excluding our African copper assets
and Koniambo, our metals and coal industrial assets delivered robust Adjusted EBITDA mining margins? of 39%.
In particular, our copper business, excluding African copper, recorded an EBITDA mining margin of 52% and a
full unit cash cost of 72c/lb, while our coal business again generated margins in excess of $30/t, basis a
$46/t thermal unit cash cost. Similarly, our marketing business is tracking towards the middle of our full year
Adjusted EBIT guidance range of $2.2-$3.2 billion, after adjusting for some $350 million of non-cash cobalt
losses reported in the first half.
“However, our African copper business did not meet expected operational performance. We have moved to address
the challenges at Katanga and Mopani with several management changes as well as overseeing a detailed operational
review, targeting multiple improvements to achieve consistent, cost-efficient production at design capacity.
Our teams have identified a credible roadmap towards delivering on the significant cashflow generation potential
of these assets, at targeted steady state production levels. At Mutanda, we are planning to transition the
operation to temporary care and maintenance by year end, reflecting its reduced economic viability in the
current market environment, primarily in response to low cobalt prices. We continue to progress studies on the
sulphide project, having the potential to extend operations for many years, and anticipate being able to provide
an update at our Investor Day in December.
“Looking ahead, we are confident that commodity fundamentals will move in our favour and that our diverse
commodity portfolio will continue to play a key role in global growth and the transition to a low-carbon
economy. Our asset teams are focussed on delivering the full potential of our business, which together with
our promising range of commodities, should see us well positioned for the future. Through continued constructive
collaboration, we remain focussed on creating sustainable long-term value for all stakeholders.”
US$ million H1 2019 H1 2018 Change % 2018
Key statement of income and cash flows highlights(2):
Net income attributable to equity holders 226 2,776 (92) 3,408
Adjusted EBITDA# 5,582 8,180(1) (32) 15,767
Adjusted EBIT# 2,229 5,091(1) (56) 9,143
Earnings per share (Basic) (US$) 0.02 0.19 (89) 0.24
Funds from operations (FFO)(3)# 3,516 5,566(1) (37) 11,595
Cash generated by operating activities before working capital
changes 5,409 6,805 (21) 13,210
Net purchase and sale of property, plant and equipment(3) 2,193 2,055(1) 7 4,899
US$ million 30.06.2019 31.12.2018 Change %
Key financial position highlights:
Total assets 127,183 128,672 (1)
Net funding(3)# 33,238 32,138 3
Net debt(3)# 16,308 14,710 11
Ratios:
FFO to Net debt(3,4)# 58.5% 78.8% (26)
Net debt to Adjusted EBITDA(4)# 1.24 0.93 33
1 Restated to present Glencore Agri on a basis consistent with its underlying IFRS treatment (equity accounting), previously proportionately accounted,
refer to APMs section for reconciliations and note 2 of the 2018 annual report.
2 Refer to basis of presentation on page 5.
3 Refer to page 9.
4 H1 2019 and H1 2018 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 66 for definition and reconciliations, to note 3 of the financial statements for
reconciliation of Adjusted EBIT/EBITDA and to page 18 for reconciliations of Mining Margins.
Healthy cash generation despite significantly lower commodity prices
– H1 2019 Adjusted EBITDA of $5.6 billion, down 32% ($5.9 billion, pre $350 million non-cash cobalt loss)
– Net income attributable to equity holders down to $0.2 billion, mainly driven by lower average period-
over-period commodity prices and impairment charges in our Chad oil and African copper portfolios
– Cash generated by operating activities before working capital changes of $5.4 billion, down 21%
– Net purchase and sale of property, plant and equipment of $2.2 billion, up 7%
– Our ramp-up/development assets, comprising Copper Africa and Koniambo, weighed on earnings in H1 2019,
with negative Adjusted EBITDA of $0.4 billion. These assets offer significant upside at steady state
production levels.
Industry leading cost positions
– First-half operational unit cash cost performance in our key commodities: copper (excluding African
copper) 72c/lb, zinc 3c/lb (40c/lb ex-gold), nickel (excluding Koniambo) 329c/lb and thermal coal $46/t
at a $32/t margin
Marketing a diversified earnings driver
– Marketing Adjusted EBIT of $1.0 billion, down 35%, but only 13%, excluding a cobalt related loss on an
‘involuntary’ long cobalt position, against a particularly strong base period
Full year outlook factors…
– On an annualised basis, pre-cobalt Marketing Adjusted EBIT of $1.3 billion tracking towards the middle
of our $2.2-$3.2 billion long-term guidance range
– Expected Industrial production weighted towards H2 for each of Copper, Zinc, Nickel, Coal and Oil
– Extensive operational and cost improvement initiatives being undertaken at African Copper and Koniambo
…and balance sheet in strong shape for the medium term
– Debt facilities renewed in March/April. Bond maturities continue to be capped at ~$3 billion in any given
year
– Although Net debt of $16.3 billion is at the upper end of our target range, on account of a new lease
accounting standard, $1.1 billion of new lease liabilities were recognised during H1 2019, that previously
would have been treated as operating leases
– Conservative 1.24x Net debt/Adjusted EBITDA ratio. Intend to manage the balance sheet over the next 6-
12 months towards our target of around 1x, in the current uncertain economic cycle backdrop
To view the full report please click
https://www.glencore.com/dam/jcr:de09eded-6a3b-42f7-9b82-f40d1a257dcd/GLEN-2019-Half-Year-
Report.pdf
and
The full announcement can be accessed using the following JSE link:
https://senspdf.jse.co.za/documents/2019/jse/isse/GLN/HYR_0708.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
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 158,000 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.
Follow us on social media:
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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
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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.
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Date: 07/08/2019 08:00:00
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