Preliminary Results 2021

RNS Number : 6472B

Glencore PLC

15 February 2022

 

NEWS RELEASE

Baar, 15 February 2022

Preliminary Results 2021

Highlights

Glencore's Chief Executive Officer, Gary Nagle, commented:

"In spite of the ongoing challenges of Covid-19, 2021 was an extraordinary year for Glencore, reflecting rising demand for our metals and energy products, record Adjusted EBITDA and the transition to new leadership.

"Against the strong commodity backdrop, and leveraging the unique combination of our transition and energy commodities, along with the global reach and scale of our marketing business, the Group delivered an 84% increase in Adjusted EBITDA to
$21.3 billion. Marketing delivered another robust performance, with Adjusted EBIT up by 11% to $3.7 billion, while multi-year or record high prices for many of our commodities, underpinned the 118% jump in Industrial Adjusted EBITDA to $17.1 billion. Net income attributable to equity holders was $5.0 billion.

"The significant improvement in the Group's financial results has driven Net debt down to $6.0 billion, allowing for today's announcement of $4.0 billion of shareholder returns, comprising a recommended $3.4 billion ($0.26 per share) base distribution (in respect of 2021 cash flows), alongside a $550 million share new buyback (c.$0.04 per share) programme.

"Looking forward, we remain focused on our strategy to enable and deliver decarbonisation and meet the increasing demand for everyday metals, while responsibly meeting the energy needs of today. We look to the future confident that we have the right pathway to succeed in a net zero economy and create sustainable long-term value for all stakeholders, while operating in a responsible manner across all aspects of our business"

US$ million	2021	2020	Change %
Key statement of income and cash flows highlights1:
Revenue	203,751	142,338	43
Adjusted EBITDA◊	21,323	11,560	84
Adjusted EBIT◊	14,495	4,416	228
Net income/(loss) attributable to equity holders	4,974	(1,903)	n.m
Earnings/(loss) per share (Basic) (US$)	0.38	(0.14)	n.m
Funds from operations (FFO)◊	17,057	8,325	105
Cash generated by operating activities before working capital changes, interest and tax	16,725	8,568	95

US$ million	31.12.2021	31.12.2020	Change %
Key financial position highlights:
Total assets	127,510	118,000	8
Total equity	36,917	34,402	7
Net funding2◊	30,837	35,428	(13)
Net debt2◊	6,042	15,844	(62)
Ratios:
FFO to Net debt◊	282.3%	52.5%	437
Net debt to Adjusted EBITDA2◊	0.28	1.37	(79)

1 Refer to basis of presentation on page 6.

2 Includes $857 million (2020: $652 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 109 for definitions and reconciliations and to note 2 of the financial statements for reconciliation of Adjusted EBIT/EBITDA.

Update on Investigations

As previously disclosed, Glencore is subject to a number of investigations by regulatory and enforcement authorities including the U.S. Department of Justice, the U.S. Commodity Futures Trading Commission, the UK Serious Fraud Office and the Brazilian Federal Prosecutor's Office. Glencore has been cooperating extensively with the various authorities in order to resolve these investigations as expeditiously as possible.

While Glencore cannot forecast with certainty the cost, extent, timing or terms of the outcomes of the investigations, the Company presently expects to resolve the U.S., UK and Brazilian investigations in 2022. Accordingly, and based on the Company's current information and understanding, the Group has raised a provision as at 31 December 2021 in the amount of $1,500 million representing the Company's current best estimate of the costs to resolve these investigations. The U.S. resolutions are expected to cover separate investigations into bribery and market manipulation. The resolution of the other investigations into the Group is not included within this provision and they remain ongoing.

We will provide further updates on the investigations at the appropriate time.

Strong financial performance

-  $21.3 billion Adjusted EBITDA, up 84% (y/y), underpinned by robust Marketing and Industrial results

-  Net income, pre-significant items: $9.1 billion, up 267%

-  Net income attributable to equity holders was $5.0 billion (loss of $1.9 billion in 2020). Significant items principally comprise the required accounting recycling to the income statement of Mopani's non-controlling interests upon its disposal ($1.0 billion), impairment charges of $1.8 billion, mainly attributable to our Koniambo nickel operation and a $1.5 billion provision raised with respect to the regulatory investigations noted above.

-  Net cash purchase and sale of PP&E: $3.8 billion, down 3%

-  Shareholder returns of $4.0 billion announced, comprising a proposed $0.26/share ($3.4 billion) base distribution in respect of 2021 cash flows, alongside a new $550 million share buyback program

ReCORD industrial asset ADJUSTED EBITDA CONTRIBUTION

-  Industrial Assets Adjusted EBITDA $17.1 billion, up 118%, underpinned by significantly higher commodity prices with many reaching record or multi-year highs, amid widespread supply/demand deficits

-  Metals $12.0 billion (+65%), Energy $5.6 billion (+439%); balance is Corporate and other

-  Unit cost results: Cu 67¢/lb (-27¢/lb y/y); Zn -4¢/lb (+3¢/lb y/y); Ni 454¢/lb (+78¢/lb y/y); coal $52.90/t ($50.6/t margin)

HIGHer AND BROAD-BASED marketing RESULTS

-  Marketing revenues $182 billion, up 46% y/y

-  Marketing Adjusted EBIT $3.7 billion, up 11% y/y

-  Energy Adjusted EBIT: $1.4 billion (-21%), as a strong 2021 coal result limited the net overall reduction, given oil's lower contribution relative to the prior year, wherein it capitalised on the exceptional market conditions

-  Metals Adjusted EBIT: $2.5 billion (+50%), as all key markets exhibited strong demand, supply constraints and inventory drawdowns

-  Viterra agricultural business contributed $473 million (2020: $211 million) share of net earnings

HEALTHY balance sheet

-  Net debt being managed around a $10 billion cap, with sustainable deleveraging (after base distribution) below such cap periodically returned to shareholders via special distributions / buybacks, as appropriate.

-  Year-end Net debt of $6.0 billion allows for $4.0 billion of shareholder returns

-  Robust cash flow coverage ratios: FFO to Net debt of 282.3% and Net debt to Adjusted EBITDA of 0.28x

-  RMI of $24.8 billion, up $5.2 billion, due to the significantly higher commodity prices

-  Available committed liquidity of $10.3 billion; bond maturities capped at c.$3 billion in any given year

-  Spot illustrative annualized free cash flow generation of c.$14.1 billion from Adjusted EBITDA of c.$26.5 billion

MINING Sector-LEADING CLIMATE STRATEGY

-  Committed in 2021 to more aggressive total emissions reductions with a new short-term target of a 15% reduction by 2026, and a 10% increase in our medium-term target to a 50% reduction by 2035. Net zero ambition by 2050

-  Responsible decline of our coal portfolio will help meet critical regional energy needs and affordability as decarbonisation pathways will be non-linear across time and geography

-  Progress on our Climate Action Transition Plan will be put to shareholders for an advisory vote at the AGM in late April 2022

To view the full report please click https://www.glencore.com/dam/jcr:4d0dff31-868e-4cbb-8813-e06c1955fd71/GLEN-2021-Preliminary-Results.pdf

For further information please contact:

Investors
Martin Fewings		t: [phone]		m: [phone]		[e-mail]
Media
Charles Watenphul		t: [phone]		m: [phone]		[e-mail]

www.glencore.com

Glencore LEI: 2138002658CPO9NBH955

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 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.

 

END

 

 

FR ZZGMZNDLGZZM