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GLENCORE PLC - GLN - Preliminary Results 2016

Release Date: 23/02/2017 09:00
Code(s): GLN     PDF:  
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GLN - Preliminary Results 2016

GLENCORE XSTRATA 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

Baar, Switzerland
23 February, 2017

                                                    Preliminary Results 2016
                       Positioned for the challenges and opportunities that lie ahead

To view the full report please click here:
http://www.glencore.com/assets/investors/doc/reports_and_results/2016/GLEN-2016-Preliminary-Results-
f.pdf

Glencore’s Chief Executive Officer, Ivan Glasenberg, commented: “Since our IPO in 2011 and
subsequent acquisition and integration of Xstrata, Glencore has never been so well positioned
as it is today.

“Our swift and decisive actions to reposition and optimise our capital structure and industrial
asset portfolio have reduced Net funding by $14.7 billion over the past eighteen months and
generated more than $1.3 billion in cost savings at our industrial assets in 2016.

“As we look forward, increasingly favourable fundamentals provide the potential to create
significant long-term value for Glencore shareholders via our leading portfolio of well capitalised
tier one assets and resilient marketing business, combined with significant low-cost copper and
zinc growth options and disciplined approach to supply.”

US$ million                                                                         2016       2015    Change %
Key statement of income and cash flows highlights(1):
Adjusted EBITDA(2)                                                                10,268      8,694          18
Adjusted EBIT(2)                                                                   3,930      2,172          81
Net income attributable to equity holders pre-significant items(4)                 1,992      1,342          48
Net income/(loss) attributable to equity holders as per financial
statements                                                                         1,379     (4,964)       n.m.
Earnings per share (pre-significant items) (Basic) (US$)                            0.14       0.10          40
Earnings per share as per financial statements (Basic) (US$)                        0.10      (0.37)       n.m.
Funds from operations (FFO)(5,6)                                                   7,770      6,615          17
Capital expenditure(3)                                                             3,497      5,957         (41)

US$ million                                                                   31.12.2016 31.12.2015    Change %
Key financial position highlights:
Total assets(7)                                                                  124,600    128,485         (3)
Current capital employed (CCE)(6,7)                                               10,075     12,443        (19)
Net funding)                                                                      32,619     41,245        (21)
Net debt(5,6)                                                                     15,526     25,889        (40)
Ratios:
FFO to Net debt(5,6)                                                               50.0%      25.6%          95
Net debt to Adjusted EBITDA(6)                                                     1.51x      2.98x        (49)
Adjusted EBITDA to net interest(6)                                                 6.70x      6.67x           –

1   Refer to basis of preparation on page 6 of the full report.
2   Refer to note 2 of the financial statements for definition and reconciliation of Adjusted EBIT/EBITDA.
3   Refer to note 2 of the financial statements for reconciliation of capital expenditure.
4   Refer to significant items table on page 7 of the full report.
5   Refer to page 9 of the full report.
6   Refer to Glossary for definition.
7   2016 reflects completion of the disposal of 50% of the Agricultural Products division on 1 December 2016, refer to note 23 of the financial
    statements.

*          Strong 2016 financial performance in challenging market conditions
           -     Adjusted EBITDA of $10.3 billion, up 18%; Adjusted EBIT of $3.9 billion, up 81%
           -     Net income pre-significant items of $2 billion, up 48%
           -     Funds from operations of $7.8 billion, up 17%
           -     Capital expenditure of $3.5 billion, down 41%

*          Underpinned by outstanding cost performance …
           -     Full year operational unit cost performance in our key commodities: copper 87c/lb, zinc –5c/lb
                 (16c/lb ex gold), nickel 265c/lb and thermal coal $39/t at a $18/t margin
           -     Significant reductions in copper and zinc cost structure expected to be sustained into 2017

*          … and the resilience of the marketing business
           - Marketing Adjusted EBIT of $2.8 billion, up 14%, supported by improved demand conditions
           -     Strong H2 2016 contribution from all 3 segments

*          Capital structure repositioned
           -     Net funding reduced by $14.7 billion over the past eighteen months to $32.6 billion (Net Debt
                 $15.5 billion)
           -     Cash flow coverage ratios improved to strong investment grade levels
                        *     FFO to Net debt: 50%
                        *     Net debt to Adjusted EBITDA: 1.5x
           -     Available committed liquidity of $16.7 billion
           -     Achievement and maintenance of strong Baa/BBB credit ratings remains a top priority
           -     Optimised capital structure ensures less risk, more flexibility and stability of distributions

*          Positioned for the challenges and opportunities that lie ahead
           -     Uniquely diversified by commodity and geography
                        *     Major low-cost supply positions in copper, zinc, nickel, coal, cobalt and ferroalloys
           -     Favourable fundamentals for our key commodities - already in deficit or transitioning to deficit
                        *     Modest total capex guidance of c.$4 billion per annum going forward (includes c.$3
                              billion of sustaining capex) – no greenfields
           -     Substantial volumes of low-cost capacity that can be restarted as and when appropriate
           -     Fixed plus variable distribution policy effective from 2018 that leverages the resilience of
                 marketing cash flows, while providing upside to commodity prices. $1 billion distribution
                 recommended for 2017
           -     Strong investment grade balance sheet that offers headroom for highly selective growth
                 opportunities
           -     Annualised free cash flow of $6.9 billion at current spot prices, based on spot annualised
                 Adjusted EBITDA of $14.6 billion

For further information please contact:

Investors
Martin Fewings               t: +41 41 709 2880      m: +41 79 737 5642      martin.fewings@glencore.com
Carlos Francisco Fernandez   t: +41 41 709 2369      m: +41 79 129 9195      carlos.fernandez@glencore.com
Media
Charles Watenphul            t: +41 41 709 2462      m: +41 79 904 3320      charles.watenphul@glencore.com
Pam Bell                     t: +44 20 7412 3471     m: +44 77 3031 9806     pam.bell@glencore.co.uk

www.glencore.com

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 155,000 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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SPONSOR
Absa Bank Limited (acting through its Corporate and Investment Banking Division)


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