Glencore 2018 half-year report

Wednesday, August 8, 2018

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Baar, 8 August 2018

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Glencore's Chief Executive Officer, Ivan Glasenberg, commented: "The strength of our diversified business model and commodity mix is once again demonstrated with a 13% increase in net income and a 23% increase in Adjusted EBITDA to $8.3 billion.

"Against a volatile but favourable trading and commodity price environment, Marketing performed towards the upper end of its guidance range with a 12% increase in Adjusted EBIT to $1.5 billion. Our Industrial business recorded Adjusted EBITDA of $6.7 billion, up 26%, reflecting the highly competitive cost positions of our asset base.

"Cash generation remains strong, with FFO up 8% to $5.6 billion and our balance sheet healthy, with Net debt of $9 billion. In addition to the $2.85 billion of shareholder distributions announced earlier this year, we recently announced a $1 billion buy-back programme.

"While broader market conditions are likely to remain volatile, confidence in our business prospects and current share trading levels point to near-term focus on deleveraging and shareholder returns / buybacks funded through cash generation. We remain focused on creating value for shareholders through the disciplined allocation of long-term capital."

US$ millionH1 2018H1 2017Change %2017
Key statement of income and cash flows highlights1:
Net income attributable to equity holders2,7762,450135,777
Adjusted EBITDA◊8,2706,7412314,762
Adjusted EBIT◊5,1193,801358,552
Earnings per share (Basic) (US$)0.190.17120.41
Funds from operations (FFO)2◊5,6255,201811,556
Net cash generated by operating activities before working capital changes6,8055,5992211,866
Capital expenditure◊2,1651,679294,234

US$ million30.06.201831.12.2017Change %
Key financial position highlights:
Total assets134,464135,593(1)
Net funding2◊31,89432,898(3)
Net debt2◊8,99710,673(16)
FFO to Net debt2,3◊133.2%108.3%
Net debt to Adjusted EBITDA3◊0.55x0.72x

1 Refer to basis of preparation on page 5.

2 Refer to page 9.

3 H1 2018 and H1 2017 ratio based on last 12 months' FFO and Adjusted EBITDA, refer to APMs section for reconciliation.

◊ 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 72 for definition and reconciliations and note 3 of the financial statements for reconciliation of Adjusted EBIT/EBITDA and capital expenditure.

Another strong financial performance

  • Adjusted EBITDA of $8.3 billion, up 23%; Adjusted EBIT of $5.1 billion, up 35%
  • Net income attributable to equity holders of $2.8 billion, up 13%; net income, pre-significant items up 40% to $3.3 billion
  • Funds from operations of $5.6 billion, up 8%
  • Continued balance sheet strength and flexibility: Net debt of $9.0 billion, down 16%
  • EPS of $0.19 per share, up 12%
  • 2nd instalment of the 2018 distribution of $1.4 billion ($0.10 per share) payable in September

Strong Marketing performance

  • Marketing Adjusted EBIT of $1.5 billion, up 12%
  • Strong performances from Metals and minerals and Energy products segments, up 17% and 23% respectively
  • Lower crop yields in key geographies reflected in weaker Agricultural products performance; stronger H2 expected

Industrial assets performance underpinned by higher prices and continued cost/asset optimisation

  • Industrial Adjusted EBITDA up 26% to $6.7 billion
  • Solid first-half mine cost/margin performances across the business (Cu: 88c/lb, Zn: -11c/lb (20c/lb ex Au), Ni: 177c/lb, Coal: $35/t margin at $50/t unit cash cost)
  • Copper and zinc mine costs higher than initial FY guidance primarily due to project ramp-up, lower by-product pricing, some modest energy cost inflation and H2 weighted production

Growth through selective M&A

  • Hunter Valley Operations large-scale premium thermal coal mine JV established in May (49% attributable to Glencore)
  • Hail Creek primarily coking coal acquisition from Rio Tinto completed on 1 August
  • Downstream oil investments in South Africa, Botswana and Brazil expected to complete in H2

Increasing returns to shareholders, funded by cash generation

  • 2018E distributions / buybacks now total $4.2 billion, comprising $2.85 billion distribution of 2017 cash flows, $0.3 billion H1 share trust purchases and $1.0 billion H2 buy-back programme
  • Confidence in own business prospects and current share trading levels point to near-term focus on deleveraging and shareholder returns/buybacks

For further information please contact:


Martin Fewings

t: +41 41 709 2880

m: +41 79 737 5642

Ash Lazenby

t: +41 41 709 2714

m: +41 79 543 3804


Charles Watenphul

t: +41 41 709 2462

m: +41 79 904 3320