Preliminary Results 2020 Highlights
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GLENCOÂE NEWS RELEASE Baar, 16 February 2021 Preliminary Results 2020 Highlights Glencore’s Chief Executive Officer, Ivan Glasenberg, commented: “The Covid-19 pandemic is an extraordinary challenge that continues to impact many aspects of day-to-day life. Against this backdrop, the strength of our 2020 underlying performance is a credit to our highly skilled and dedicated employees, and also reflects our unique business model and ability to quickly adapt to changing market conditions and customer needs. “Navigating from recessionary conditions in the first half to a strong price recovery for most commodities in the second, Adjusted EBITDA finished the year flat at $11.6 billion. An outstanding Marketing performance lifted EBIT by 41% to $3.3 billion, while Industrial Adjusted EBITDA fell 13% to $7.8 billion, primarily reflecting weaker coal prices. A notable improvement was seen at our Katanga operation in the DRC, where its successful ramp-up lifted Africa copper EBITDA to $712 million from a loss of $349 million in 2019. Strong second half cash flows repositioned Net debt of $15.8 billion within our target range, allowing for the resumption of distributions. We are recommending to shareholders a distribution of $0.12 per share. “As the world focuses on the pathway to recovery from Covid-19, it is clear that meeting the goals of the Paris Agreement has taken on even greater urgency. While innovation and technological advances have transformed how we live and work, the commodities needed to enable this have not. Our commodities are essential in developing all facets of infrastructure needed to deliver the goals of energy and mobility transition. “We are focused on playing our part in supporting the Paris goals and have set out a clear strategy to address our total emissions footprint – being Scope 1, 2 and 3 emissions. “Glencore has been transforming the global commodities industry for nearly half a century, growing from a trader of ferrous and non-ferrous metals, minerals and crude oil, into one of the world’s largest natural resource companies. Today, the business and its portfolio of commodities is uniquely positioned for the needs of the future. It is ready to support the transition to a low- carbon economy and realise its ambition of net-zero by 2050. We remain focussed on creating sustainable long-term value for all stakeholders while operating in a responsible manner across all aspects of our business” US$ million 2020 2019 Change % Key statement of income and cash flows highlights1: Revenue 142,338 215,111 (34) Adjusted EBITDA◊ 11,560 11,601 – Adjusted EBIT◊ 4,416 4,151 6 Net loss attributable to equity holders (1,903) (404) (371) Loss per share (Basic) (US$) (0.14) (0.03) (380) Funds from operations (FFO)2◊ 8,325 7,865 6 Cash generated by operating activities before working capital changes 8,568 10,346 (17) Net purchase and sale of property, plant and equipment2◊ 3,921 4,966 (21) US$ million 31.12.2020 31.12.2019 Change % Key financial position highlights: Total assets 118,000 124,076 (5) Net funding2,3◊ 35,428 34,366 3 Net debt2,3◊ 15,844 17,556 (10) Ratios: FFO to Net debt2◊ 52.5% 44.8% 17 Net debt to Adjusted EBITDA◊ 1.37 1.51 (9) 1 Refer to basis of presentation on page 7. 2 Refer to page 11, also noting that 2019 FFO was materially impacted by the lag of income taxes paid in 2019, in respect of 2018 profitability. 3 Includes $652 million (2019: $607 million) of Marketing related lease liabilities. ◊ 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 110 for definitions and reconciliations and to note 2 of the financial statements for reconciliation of Adjusted EBIT/EBITDA. Glencore Preliminary Results 2020 1 HIGHLIGHTS continued HEALTHY RESULTS – $11.6bn Adjusted EBITDA, flat year over year (y/y), with stronger Marketing and Industrial metals offset by weaker coal prices – Net income pre-significant items: $2.5bn, in line with 2019 – Significant items are mainly non-cash impairment charges amounting to $5.9bn (2019: $2.4bn), primarily in respect of Mopani, Colombian coal and the African oil portfolio. Resulting statutory loss of $1.9bn – Net purchase and sale of PP&E: $3.9bn, down 21% – Proposed $0.12/share ($1.6bn) 2021 distribution RESILIENT INDUSTRIAL ASSET PERFORMANCE – Industrial Assets Adjusted EBITDA $7.8bn, down 13%. Strong metals performance outweighed by weaker coal prices – Metals $7.3bn (+31%), Energy $1.0bn (-73%); balance is Corporate and other – Early Covid-19 impacts followed by multi-year highs for base metals. Energy complex also recovered into year-end – Cost/margin performance: Cu 94¢/lb (-15¢/lb y/y); Zn -7¢/lb (-35¢/lb y/y); Ni 376¢/lb (-22¢/lb y/y); coal $45.90/t ($11/t margin) OUTSTANDING MARKETING RESULTS – Marketing Adjusted EBIT $3.3bn, c. +$1bn y/y (+41%) – Energy $1.8bn (+33%) driven by exceptional price movements/dislocations and logistics/storage demand – Metals $1.7bn (+53%) reflects supportive market conditions and absence of cobalt market challenges experienced in 2019 – Viterra agricultural business contributed $211m (2019: $58m) share of net earnings – Unchanged longer-term guidance range of $2.2-3.2bn Adjusted EBIT STRONG BALANCE SHEET – Net debt $15.8bn, successfully repositioned in our $10-16bn target range; targeting below the middle of the range by end 2021 – Net debt / Adjusted EBITDA down to 1.37x – RMI $19.6bn, near the top end of our $15-20bn target range, reflecting higher metal prices and carry-trade opportunities – Available committed liquidity of $10.3bn; bond maturities capped at c.$3bn in any given year – Spot illustrative free cash flow generation of c.$7.2bn from Adjusted EBITDA of $16bn, using end of January 2021 prices SECTOR-LEADING CLIMATE STRATEGY – Medium-term Paris aligned total C02e emissions reduction targets and 2050 net zero ambition for Scope 1+2+3 – Responsible stewardship of declining coal business over time as industry decarbonises – Climate strategy to be put to shareholders for an advisory vote at our AGM in April PORTFOLIO OPTIMISATION CONTINUING – Finalised agreement for sale of Mopani, with completion expected in Q2 2021 – Informed the Colombian government of our intention to relinquish Prodeco’s mining licences – Contributed our share of Alumbrera into the larger MARA joint venture For further information please contact: Investors Martin Fewings t: +41 41 709 2880 m: +41 79 737 5642 [email protected] Media Charles Watenphul t: +41 41 709 2462 m: +41 79 904 3320 [email protected] www.glencore.com Glencore LEI: 2138002658CPO9NBH955 Glencore Preliminary Results 2020 2 HIGHLIGHTS continued 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 145,000 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. Glencore Preliminary Results 2020 3 CHIEF EXECUTIVE OFFICER’S REVIEW A CHALLENGING TIME FOR THE WORLD The Covid-19 pandemic is an extraordinary challenge, impacting colleagues, our families, local communities and society at large. As a responsible operator, our top priority is to protect the safety and health of our people and the communities that host our businesses. Although some of our industrial assets were required to temporarily suspend operations during the year in line with national and regional guidance, or where our risk assessment determined it was appropriate to do so, the majority of our assets continued to operate relatively normally after implementation of appropriate precautionary measures. Across our industry, the impacts were most notable in Peru, South Africa and Colombia, while Australia and Canada were relatively unaffected. The cumulative impacts of mine supply disruption helped to offset the initial demand shock from rapid lockdowns and the corresponding slowdown in global economic activity. While demand remained challenging in many key global economies, China’s rapid recovery, combined with material global central bank and governmental fiscal support, improved supply/demand fundamentals and started to generate favourable sector sentiment and price momentum. Average price performances for our key metals commodities’ benchmarks was largely flat to slightly lower year-on-year, although this outcome reflects two very different halves, from recessionary pricing conditions in March/April to multi-year highs towards the end of the year. Coal pricing benchmarks underperformed, finishing 2020 c.10-30% below 2019 averages, under pressure from reduced economic activity and trade tensions, although prices also materially improved into year-end. PATHWAY TO NET ZERO A clear emerging force, particularly over the last twelve to eighteen months, is the growing global momentum and increasing consensus around achieving the goals of the Paris agreement and targeting net zero global carbon emissions. Europe and more than 110 countries have announced ambitions to achieve carbon neutrality by 2050, supported more recently by China’s plans to target net zero emissions by 2060.