Wrap Text
GLN - Preliminary Results 2023
GLENCORE
GLENCORE PLC
(Incorporated in Jersey under the Companies (Jersey) Law 1991)
(Registration number 107710)
JSE Share Code: GLN
LSE Share Code: GLEN
ISIN: JE00B4T3BW64
LEI: 2138002658CPO9NBH955
NEWS RELEASE
Baar, 21 February 2024
Preliminary Results 2023
Highlights
Glencore's Chief Executive Officer, Gary Nagle, commented:
"Against the backdrop of a rebalancing and normalisation of international energy trade flows, our Marketing and Industrial
segments posted a lower, albeit healthy, earnings performance in 2023, delivering Group Adjusted EBITDA of $17.1 billion, cash
generated by operating activities of $15.1 billion and Net income attributable to equity holders of $4.3 billion.
"Aided by healthy operational cash generation, after funding $5.6 billion of net capex and $10.1 billion of shareholder returns, the 2023
year-end Net debt outturn was contained to $4.9 billion vs $0.1 billion in 2022. With a Net debt/Adjusted EBITDA of 0.29x, we continue
to enjoy significant financial headroom and strength.
"For 2024, basis 2023 cash flows, we are recommending to shareholders a $0.13 per share (c.$1.6 billion) base cash distribution,
comprising $1 billion from Marketing cash flows and 25% ($0.6 billion) of Industrial attributable cash flows.
This distribution, along our shareholder return journey, must be contextualised by the significant announcement in November 2023
that we had entered into a binding agreement with Teck Resources Limited (Teck) to acquire a 77% effective interest in its
steelmaking coal business, Elk Valley Resources (EVR) for $6.93 billion in cash. These are world-class assets, expected to meaningfully
complement our existing thermal and steelmaking coal production in Australia, Colombia, and South Africa. EVR also supports the
transition as an input into steel production needed for certain renewable energy infrastructure. The transaction is subject to
mandatory regulatory approvals and, while closing could occur earlier, it is expected no later than Q3 2024. The acquisition of EVR
unlocks the potential, subject to shareholder approval, for a value accretive demerger of our combined coal and carbon steel
materials business and, in support thereof, we advised that Glencore could demerge the combined company, only once Glencore
had sufficiently delevered towards a revised $5 billion Net debt cap, expected to occur within 24 months from close.
Over the past few years, our capital structure and credit profile has been managed around a $10 billion Net debt cap, with
sustainable deleveraging (after base distribution) below the cap periodically returned to shareholders via special distributions and
buybacks. Under this framework, we announced $20.3 billion of shareholder returns since 2020, comprising $10 billion of base
distributions and $10.3 billion of "top-up" returns. Following the EVR announcement, we are now managing the balance sheet
around a revised $5 billion Net Debt cap, alongside our continued commitment to minimum strong BBB/Baa ratings.
Although there are no "top-up" returns at this point, the business is expected to be highly cash generative at current spot commodity
prices (spot illustrative annualised free cash flow generation of c.$5.2 billion from Adjusted EBITDA of c.$15.0 billion), which augers
well for top-up returns to recommence in the future.
"As the world moves towards a low-carbon economy, we remain focused on supporting the energy needs of today whilst investing
in our transition commodities portfolio. During 2023, we acquired a 30% equity stake in Alunorte alongside a 45% equity stake in
Mineracao Rio do Norte S.A., securing low carbon and cost alumina units for our Marketing business. In copper, we acquired the
remaining 56.25% interest in the MARA brownfield copper project in Argentina that we did not already own, as well as the balance
of Polymet shares (c.18%). Polymet formed a 50:50 JV with Teck, establishing the New Range Copper Nickel venture in Minnesota.
These additions, along with a near doubling of El Pachon's resource, added more than 5 billion tonnes of resource to our copper
resource inventory in 2023.
"While we continue to remain focused on operating safely, responsibly and ethically and creating sustainable long-term value for
all our stakeholders, the strength of our diversified business model, across industrial and marketing, focusing on metals and energy,
has again in 2023 proved itself adept in a range of market conditions."
US$ million 2023 2022 Change %
Key statement of income and cash flows highlights(1):
Revenue 217,829 255,984 (15)
Adjusted EBITDA 17,102 34,060 (50)
Adjusted EBIT 10,392 26,657 (61)
Net income for the year attributable to equity holders 4,280 17,320 (75)
Earnings per share (Basic) (US$) 0.34 1.33 (74)
Funds from operations (FFO)(2#) 9,452 28,938 (67)
Distributions to equity holders and purchase of own shares 10,130 7,539 34
1 Refer to basis of presentation on page 7.
2 Significantly impacted in 2023, having absorbed the lag effect of settlement in H1 2023 of $2.7 billion of 2022 final income tax payments in Australia and Colombia.
# Adjusted measures referred to as Alternative performance measures (APMs) which are not defined or specified under the requirements of International Financial Reporting
Standards; refer to APMs section on page 122 for definitions and reconciliations and to note 2 of the financial statements for reconciliation of Adjusted EBIT/EBITDA.
US$ million 31.12.2023 31.12.2022 Change %
Key financial position highlights:
Total assets 123,869 132,583 (7)
Total equity 38,237 45,219 (15)
Net funding# 31,062 27,500 13
Net debt# 4,917 75 n.m.
Ratios:
Net debt to Adjusted EBITDA? 0.29 0.00 n.m.
# 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 122 for definitions and reconciliations and to note 2 of the financial statements for reconciliation of Adjusted EBIT/EBITDA.
STRONG FINANCIAL PERFORMANCE
– $17.1 billion Adjusted EBITDA, down 50% year-on-year (y/y), primarily reflecting the rebalancing and normalisation of
international energy trade flows, with coal and LNG, and to a lesser extent, oil prices materially declining
– Net income, pre-significant items (see page 9): $6.7 billion, down 65%
– Post significant items, Net income attributable to equity holders was $4.3 billion, down 75%. Significant items, mainly
comprising impairments, reflect lower cobalt price assumptions impacting Mutanda and macro assumption revisions at
several zinc assets
– Net cash purchase and sale of PP&E: $5.6 billion, up 22%
– Proposed $0.13/share base distribution ($1.6 billion), in respect of 2023 cash flows
INDUSTRIAL ASSET RESULTS
– Industrial Assets Adjusted EBITDA $13.2 billion, down 52%, primarily reflecting lower coal earnings with the significant reduction
in energy prices in 2023
– Metals $5.4 billion, down 41%, reflecting lower realised cobalt, nickel and zinc prices, and reduced volumes; Energy $8.5 billion,
down 55%, mainly due to significantly lower coal prices
– Unit cash costs: Cu 163¢/lb (+83¢ y/y), with c.50c/lb of reduced by-product credits (cobalt being the largest contributor) and a
10c/lb non-cash inventory adjustment; Zn 49¢/lb (-11¢ y/y); Ni 871¢/lb (+240¢ y/y), including 24c/lb of Koniambo expensed capex;
coal $70.5/t (-$12.1/t) at a $70.2/t margin. 2024 unit cash costs projected to be lower across all of Cu, Zn, Ni, and coal
MARKETING RESULTS
– Marketing Adjusted EBIT $3.5 billion, down 46% y/y
– Energy Adjusted EBIT: $1.7 billion (-67%), in a return to a more stable market environment, following the extreme market
volatility levels, dislocations and complexities exhibited during 2022
– Metals Adjusted EBIT: $1.7 billion (+5%), reflecting broadly consistent physical marketing conditions for many of our most
important commodities
– Viterra EBITDA was $2.1 billion (2022: $2.0 billion), while Glencore's equity accounted share of Viterra declined to $321 million
($494 million in 2022).
ROBUST BALANCE SHEET
– Net debt to Adjusted EBITDA of 0.29x
– Available committed liquidity of $12.9 billion; executed additional $3 billion 1 year committed liquidity facility in February 2024.
Bond maturities capped at c.$3 billion in any given year
CLIMATE AMBITION
– Extensive engagement with shareholders during the year on a range of climate matters, including seeking investors' views on
anticipated changes in our updated Climate Action Transition Plan that will be put to shareholders at the 2024 AGM.
– There was broad support for our climate strategy, recognising the importance of maintaining a strategy that remains resilient
to the risks and opportunities of the evolving energy transition, and encouragement to continue making progress towards
our ambition of achieving net zero industrial emissions by 2050, subject to a supportive policy environment.
– The principal areas of shareholder interest included a comparison of our targets and ambition to various relevant IEA scenarios,
understanding progress on industrial emissions reduction between our short-term 2026 target and medium-term 2035 target
and integration of the recently announced EVR acquisition into the climate strategy.
– We will, among other actions, maintain our commitment to reducing our total industrial emissions footprint and report on
progress against our targets and ambition, update our assessment of the resilience of our portfolio and expand analysis of our
targets and ambition against a range of climate policy scenarios.
– We intend to publish our updated Climate Action Transition Plan in March 2024 and report on progress against our industrial
emission reduction targets and ambition in our 2023 Annual Report.
To view the full report please click here: https://www.glencore.com/.rest/api/v1/documents/static/7e55cef8-54b5-47c5-8a48-
171d685e319d/GLEN-2023-Preliminary-Results.pdf
To view the full report on the Johannesburg Stock Exchange portal, website please click here:
https://senspdf.jse.co.za/documents/2024/JSE/ISSE/GLN/2023-PRes.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
This announcement contains inside information.
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 commodities that advance everyday life. Through a network of assets, customers and suppliers that spans the globe, we produce,
process, recycle, source, market and distribute the commodities that support decarbonisation while meeting the energy needs of
today.
With around 140,000 employees and contractors and a strong footprint in over 35 countries in both established and emerging regions
for natural resources, our marketing and industrial activities are supported by a global network of more than 40 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 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.
We recognise our responsibility to contribute to the global effort to achieve the goals of the Paris Agreement by decarbonising our
own operational footprint. We believe that we should take a holistic approach and have considered our commitment through the
lens of our global industrial emissions. Against a 2019 baseline, we are committed to reducing our Scope 1, 2 and 3 industrial emissions
by 15% by the end of 2026, 50% by the end of 2035 and we have an ambition to achieve net zero industrial emissions by the end of
2050. For more detail see our 2022 Climate Report on the publication page of our website at glencore.com/publications.
Important notice
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.
Cautionary statement regarding forward-looking information
Certain descriptions in this document are oriented towards future events and therefore contains statements that are, or may be
deemed to be, "forward-looking statements" which are prospective in nature. Such statements may include, without limitation,
statements in respect of trends in commodity prices and currency exchange rates; demand for commodities; reserves and resources
and production forecasts; expectations, plans, strategies and objectives of management; expectations regarding financial
performance, results of operations and cash flows, climate scenarios; sustainability performance (including, without limitation,
environmental, social and governance) related goals, ambitions, targets, intentions, visions, milestones and aspirations; approval of
certain projects and consummation of certain transactions (including, without limitation, acquisitions and disposals, in particular the
proposed acquisition of a majority stake of EVR from Teck Resources Limited and potential subsequent demerger of the combined
coal and carbon steel materials business); closures or divestments of certain assets, operations or facilities (including, without
limitation, associated costs); capital costs and scheduling; operating costs and supply of materials and skilled employees; financings;
anticipated productive lives of projects, mines and facilities; provisions and contingent liabilities; and tax, legal and regulatory
developments.
These forward-looking statements may be identified by the use of forward-looking terminology, or the negative thereof including,
without limitation, "outlook", "guidance", "trend", "plans", "expects", "continues", "assumes", "is subject to", "budget", "scheduled",
"estimates", "aims", "forecasts", "risks", "intends", "positioned", "predicts", "projects", "anticipates", "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. The information in this document provides an insight into how we currently intend to
direct the management of our businesses and assets and to deploy our capital to help us implement our strategy. The matters
disclosed in this document are a 'point in time' disclosure only. 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 conditions and discussions of strategy, and reflect judgments, assumptions, estimates and
other information available as at the date of this document or the date of the corresponding planning or scenario analysis process.
By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause
actual results, performance or achievements to differ materially from any future event, results, performance, achievements or other
outcomes expressed or implied by such forward-looking statements. Important factors that could impact these uncertainties include
(without limitation) those disclosed in the risk management section of our latest Annual Report and Half-Year Report (which can each
be found on our website). These risks and uncertainties may materially affect the timing and feasibility of particular developments.
Other factors which impact risks and uncertainties include, without limitation: the ability to produce and transport products profitably;
demand for our products and commodity prices; development, efficacy and adoption of new or competing technologies; changing
or divergent preferences of our stakeholders; changes to the assumptions regarding the recoverable value of our tangible and
intangible assets; changes in environmental scenarios and related regulations, including, without limitation, transition risks and the
evolution and development of the global transition to a low carbon economy; recovery rates and other operational capabilities; timing,
quantum and nature of certain acquisitions and divestments; health, safety, environmental or social performance incidents; labor
shortages or workforce disruptions; natural catastrophes or adverse geological conditions, including, without limitation, the physical
risks associated with climate change; effects of global pandemics and outbreaks of infectious disease; the outcome of litigation or
enforcement or regulatory proceedings; the effect of foreign currency exchange rates on market prices and operating costs; actions
by governmental authorities, such as changes in taxation or regulation or changes in the decarbonisation policies and plans of other
countries; changes in economic and financial market conditions generally or in various counties or regions; political or geopolitical
uncertainty; and wars, political or civil unrest, acts of terrorism, cyber attacks or sabotage.
Readers, including, without limitation, investors and prospective investors, should review and consider these risks and uncertainties
(as well as the other risks identified in this document) when considering the information contained in this document. Readers should
also note that the high degree of uncertainty around the nature, timing and magnitude of climate-related risks, and the uncertainty
as to how the energy transition will evolve, makes it difficult to determine all potential risks and opportunities and disclose these and
any potential impacts with precision. Neither Glencore nor any of its affiliates, associates, employees, directors, officers or advisers,
provides any representation, warranty, assurance or guarantee as to the accuracy, completeness or correctness, likelihood of
achievement or reasonableness of any forward-looking information contained in this document or that the events, results,
performance, achievements or other outcomes expressed or implied in any forward-looking statements in this document will actually
occur. Glencore cautions readers against reliance on any forward-looking statements contained in this document, particularly in light
of the long-term time horizon which this document discusses in certain instances and the inherent uncertainty in possible policy,
market and technological developments in the future.
No statement in this document is intended as any kind of forecast (including, without limitation, a profit forecast or a profit estimate),
guarantee or prediction of future events or performance and past performance cannot be relied on as a guide to future performance.
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.
Cautionary statement regarding climate strategy
Glencore operates in a dynamic and uncertain market and external environment. Plans and strategies can and must adapt in
response to dynamic market conditions, changing preference of our stakeholders, joint venture decisions, changing weather and
climate patterns, new opportunities that might arise or other changing circumstances. Investors should not assume that our climate
strategy will not evolve and be updated as time passes. Additionally, a number of aspects of our strategy involve developments or
workstreams that are complex and may be delayed, more costly than anticipated or unsuccessful for many reasons, including, without
limitation, reasons that are outside of Glencore's control. Our strategy will also necessarily be impacted by changes in our business,
such as the proposed acquisition of EVR and potential demerger of the combined coal and carbon steel materials business.
There are inherent limitations to scenario analysis and it is difficult to predict which, if any, of the scenarios might eventuate. Scenario
analysis relies on assumptions that may or may not be, or prove to be, correct and that may or may not eventuate and scenarios may
also be impacted by additional factors to the assumptions disclosed. Given these limitations we treat these scenarios as one of several
inputs that we consider in our climate strategy.
Due to the inherent uncertainty and limitations in measuring greenhouse gas (GHG) emissions and operational energy consumption
under the calculation methodologies used in the preparation of such data, all CO2e emissions and operational energy consumption
data or volume references (including, without limitation, ratios and/or percentages) in this document are estimates. GHG emissions
calculation and reporting methodologies may change or be progressively refined over time resulting in the need to restate previously
reported data. There may also be differences in the manner that third parties calculate or report such data compared to Glencore,
which means that third-party data may not be comparable to Glencore's data. For information on how we calculate our emissions
and operational energy consumption data, see our latest Basis of Reporting, Climate Report and Extended ESG Data, which is available
on our website.
Sources
Certain statistical and other information included in this document is sourced from publicly available third-party sources. This
information has not been independently verified and presents the view of those third parties, and may not necessarily correspond to
the views held by Glencore and Glencore expressly disclaims any responsibility for, or liability in respect of, and makes no
representation or guarantee in relation to, such information (including, without limitation, as to its accuracy, completeness or whether
it is current). Glencore cautions readers against reliance on any of the industry, market or other third-party data or information
contained in this document.
Information preparation
In preparing this document, Glencore has made certain estimates and assumptions that may affect the information presented.
Certain information is derived from management accounts, is unaudited and based on information Glencore has available to it at the
time. Figures throughout this document are subject to rounding adjustments. The information presented is subject to change at any
time without notice and we do not intend to update this information except as required.
This document contains alternative performance measures which reflect how Glencore's management assesses the performance of
the Group, including results that exclude certain items included in our reported results. Further details and information needed to
reconcile such information to our reported results can be found in the section of this report entitled "Alternative Performance
Measures". For further information on how we calculate certain non-financial metrics such as fatalities at our industrial operations,
please refer to our latest Basis of Reporting, which is available on our website.
Subject to any terms implied by law which cannot be excluded, Glencore accepts no responsibility for any loss, damage, cost or
expense (whether direct or indirect) incurred by any person as a result of any error, omission or misrepresentation in information in
this document.
Other information
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.
Sponsor
Absa Corporate and Investment Bank, a division of Absa Bank Limited
Date: 21-02-2024 09:00:00
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