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Glencore PLC — Earnings Release 2016
Feb 23, 2017
6185_rns_2017-02-23_80729dd1-b061-4fdd-90a0-9fb407802cdb.html
Earnings Release
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RNS Number : 6085X
Glencore PLC
23 February 2017
Glencore plc
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:
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 highlights1: | |||||
| Adjusted EBITDA2 | 10,268 | 8,694 | 18 | ||
| Adjusted EBIT2 | 3,930 | 2,172 | 81 | ||
| Net income attributable to equity holders pre-significant items4 | 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 expenditure3 | 3,497 | 5,957 | (41) |
| US$ million | 31.12.2016 | 31.12.2015 | Change % | |
| Key financial position highlights: | ||||
| Total assets7 | 124,600 | 128,485 | (3) | |
| Current capital employed (CCE)6,7 | 10,075 | 12,443 | (19) | |
| Net funding5,6 | 32,619 | 41,245 | (21) | |
| Net debt5,6 | 15,526 | 25,889 | (40) | |
| Ratios: | ||||
| FFO to Net debt5,6 | 50.0% | 25.6% | 95 | |
| Net debt to Adjusted EBITDA6 | 1.51x | 2.98x | (49) | |
| Adjusted EBITDA to net interest6 | 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 | [email protected] | |||
| Carlos Francisco Fernandez | t: +41 41 709 2369 | m: +41 79 129 9195 | [email protected] | |||
| Media | ||||||
| Charles Watenphul | t: +41 41 709 2462 | m: +41 79 904 3320 | [email protected] | |||
| Pam Bell | t: +44 20 7412 3471 | m: +44 77 3031 9806 | [email protected] | |||
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.
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