2023 Half-year Report.
Highlights
Glencore's Chief Executive Officer, Gary Nagle, commented:
"The strength of our diversified business model across industrial and marketing, focusing on metals and energy, has again proved itself adept in a range of market conditions.
"Against the backdrop of a normalisation of commodity market imbalances and volatility, primarily across the energy spectrum, our Marketing and Industrial segments posted a healthy earnings performance, delivering Group Adjusted EBITDA of $9.4 billion, cash generated by operating activities of $8.4 billion and Net income attributable to equity holders of $4.6 billion.
"Reflecting these solid headline earnings, together with a $3.7 billion release of net working capital, including $1.4 billion of readily marketable inventories, net funding remained static over the period, after disbursing $5.2 billion of shareholder returns, $2.5 billion of net capital expenditure and $2.7 billion of final 2022 tax payments in Australia and Colombia. Net debt finished the period at
$1.5 billion.
"Our shareholder returns framework of managing Net debt, in the ordinary course of business, around a $10 billion cap, with deleveraging periodically returned to shareholders, informed today's announcement of additional "top-up" returns of c.$2.2 billion, lifting total announced shareholder returns this year to c.$9.3 billion.
"As the world moves towards a low-carbon economy, we remain focused on supporting the energy needs of today whilst investing in our transition metals portfolio. Over the year to date, we committed $1.25 billion, mainly on purchasing the balance of the large, long-life MARA copper project, not already held by Glencore, and acquiring a minority stake in Alunorte, a world class alumina refinery, thereby providing Glencore with long-term exposure to lower-quartile carbon alumina.
"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 and ethical manner across all aspects of our business."
2023 HALF-YEAR FINANCIAL SCORECARD
• Marketing Adjusted EBIT of $1.8 billion, annualising above our $2.2-3.2 billion p.a. long-term guidance range, down 52% period-on-period from last year's exceptionally strong performance
• Industrial Assets Adjusted EBITDA of $7.4 billion, down 51%, impacted primarily by lower pricing, particularly in coal, as well as inflationary cost impacts across the asset base, much of it having lagged and been heavily influenced by the surge in energy prices during 2022.
• $9.4 billion Adjusted EBITDA, down 50%, reflecting the normalisation of primarily energy market imbalances and volatility from the extreme levels seen in 2022
• Net income attributable to equity holders was $4.6 billion ($12.1 billion in H1 2022), down 61%
• Adjusted EBITDA mining margins were 25% in our metals operations and 50% in our energy operations, compared to 43% and 66% respectively during H1 2022
INVESTING IN TRANSITION METALS
• $1.25 billion of recent investment commitments in transition metals, comprising:
- $700 million to acquire a 30% equity stake in Alunorte and a 45% equity stake in Mineracão Rio do Norte S.A., from Norsk Hydro;
- $475 million to acquire the remaining 56.25% interest in the MARA copper project, not already owned, from Pan American Silver, taking Glencore to 100% ownership;
- $73 million to acquire the remaining 18% in Polymet not already owned, a 50:50 JV partner in the New Range Copper Nickel venture with Teck Resources in Minnesota.
BALANCE SHEET
• After consideration of near-term cash commitments and potential M&A, period-end Net debt of $1.5 billion, supported
c.$2.2 billion of "top-up" shareholder payments, lifting total 2023 announced shareholder returns to c.$9.3 billion.
• This additional return will be effected by way of a c.$1 billion ($0.08 per share) special cash distribution and a new $1.2 billion buyback programme intended to run until release of our full year results in February 2024. The special cash distribution of
$0.08 per share will be paid alongside the $0.22 per share second tranche of the cash distribution announced in February 2023
• Available committed liquidity of $12.9 billion; bond maturities maintained around a cap of $3 billion in any given year
• In June 2023, Glencore agreed to dispose of its interest in Viterra in a cash and shares transaction with Bunge. For its 50% stake, Glencore will receive $1.0 billion in cash and c.$3.1 billion in Bunge stock (basis Bunge's stock price at the date of announcement, but worth c.$3.8 billion (up 23%) as of 4 August 2023). The merger is expected to close in mid-2024.
• Spot illustrative annualised free cash flow generation of c.$7.3 billion from Adjusted EBITDA of c.$17.4 billion
https://www.investegate.co.uk/announcem ... rt/7681673Div 0.2$ and a special of 0.02$. Ex div 31 Aug 23, paid 22 Sep 23.
Ian (I hold).