Glencore announced preliminary results for 2018

Time:Fri, 22 Feb 2019 05:50:33 +0800

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Glencore’s Chief Executive Officer, Mr Ivan Glasenberg, commented that “We are pleased to report that we have delivered both record Adjusted EBITDA and significant cash returns to shareholders in 2018. Reflecting the strength of our uniquely diversified business model and commitment of our people, we achieved these results in a challenging operating environment. Our asset portfolio continued to deliver overall competitive all-in unit costs, which allowed the Company to capitalise on healthy average commodity prices and generate attractive margins. Adjusted EBITDA increased 8% to USD 15.8 billion and net income before significant items rose 5% to USD 5.8 billion.

“Our strong cash generation underpinned USD 5.2 billion of announced shareholder returns and buybacks in 2018. Reflecting the strength of these cash flows, we are again recommending to shareholders a 2019 base distribution of USD 0.20 per share (~USD 2.8 billion), payable in two equal instalments in 2019. We also announce today a new USD 2 billion buyback program, which will run until the end of 2019. We will proactively look to top this up (in August, or otherwise) as market conditions support, including automatically from a targeted USD 1 billion of non-core asset disposals in 2019.

“Our commodity portfolio and its key role in enabling the energy and mobility transition for a low-carbon economy enables us to look ahead with confidence and to remain focused on creating sustainable long-term value for all our shareholders.”

Key statement of income and cash flows highlights

	2018	2017	Changes(%)
Net income attributable to equity holders	3408	5777	-41
Adjusted EBITDA?	15767	14,5451	8
Adjusted EBIT?	9143	8,4591	8
Earnings per share (Basic) (US$)	0.24	0.41	-41
Funds from operations (FFO)2,3?	11595	11,3501	2
Cash generated by operating activities before working capital changes	13210	11866	11

In USD million

Another record Adjusted EBITDA performance
Adjusted EBITDA of USD 15.8 billion, up 8%; Adjusted EBIT of USD 9.1 billion, also up 8%
Net income attributable to equity holders down 41% to USD 3.4 billion, mainly due to non-cash impairments at Mutanda and Mopani, totalling USD 1.4 billion, compared to USD 1.3 billion of accounting gains on sales of investments in the base period
Resulting EPS down 17¢ to 24¢/share

Marketing Adjusted EBIT down USD 0.5 billion, still well within our long-term guidance range
Some industrial metal inventories (e.g. copper) reaching near-historical lows on exchange, indicating balanced to undersupplied markets
Generally positive market conditions, hampered by alumina “basis risk” impact and a challenging cobalt market in H2
Marketing EBIT guidance for 2019 towards the middle of our USD 2.2-3.2 billion long-term range

Industrial Adjusted EBITDA up USD 1.7 billion (15%) supported by ramp-ups, acquisitions and prices
Restarts of Katanga’s processing operations and zinc mining at Lady Loretta (Mount Isa)
HVO and Hail Creek contributed positively post-acquisition
H1 commodity prices generally strong; H2 lower but still well above H1 2016 lows. Coal prices were strong throughout
Looking forward, Mutanda’s updated mine plan reduces annual copper production to 100,000 tonnes per year from oxide and transitional ores (vs 200,000 tonnes historically), pending a future investment decision on whether and how to process the now increased sulphide reserves/resources.
2019 production guidance in all commodities expected higher than 2018