Preliminary Results 2022
Highlights
Glencore’s Chief Executive Officer, Gary Nagle, commented:
“The global pandemic, recovery from it and years of underinvestment, followed by conflict in Europe, exposed pre-existing vulnerabilities in energy security and supply chains, underpinning the generally high and volatile 2022 commodity price environment, which enabled the Group to generate record profitability for the year.
“The unprecedented developments in global energy markets were material drivers for both our marketing and industrial businesses, lifting Group Adjusted EBITDA to $34.1 billion, up $12.8 billion over the period. Marketing posted another record performance, with Adjusted EBIT of $6.4 billion, up 73% year on year, driven primarily byour energy departments successfully navigating the extreme market imbalances, volatility and dislocations across crude oil, LNG, refined products, coal and logistics infrastructure . Industrial EBITDA increased by $10.2 billion to $27.3 billion, benefitting primarily from record prices for our key coal benchmarks, amplified by theincremental contribution from the two-thirds of Cerrejón, acquired in January 2022, that Glencore did not previously own .
“Aligned with the record Adjusted EBITDA results, particularly in marketing, our net working capital significantly increased during the period, reflecting materially higher energy prices and elevated commodity market volatilities, where such additional investment in working capital should be considered in the context of the $3.8 billion increase in Energy Marketing Adjusted EBIT to $5.2 billion . Accounting for this build, significant surplus cash generation reduced Net debt to $0.1 billion, allowing for today’s announcement of $7.1 billion (c.$0.56/share) of shareholder returns, comprising a $5.1 billion base cash distribution ($0.40/share), an additional $0.5 billion “top-up” cash distribution ($0.04/share) and a new $1.5 billion buy back programme (c.$0.12/share).
“High inflation rates and associated tighter monetary conditions present some risk to the economic outlook in 2023. China’s reopening, however, together with a continued global focus on energy security and decarbonisation / electrification, mean that demand for many of our commodities is likely to remain healthy, while supply constraints persist and inventories remain relatively low .
“Recent government policies, such as the US Inflation Reduction Act and the EU’s proposed Green Deal Industrial Plan, demonstrate the growing need for critical raw materials through to the end of the decade and beyond, necessitating fresh investment in both primary supply and recycling.
“ The strength of our diversified business model across industrial and marketing, focusing on metals and energy, has proved itself adept in a range of market conditions, giving us a solid foundation to successfully navigate shorter-term challenges that may arise, as well as meet the resource needs of the future. I would like to thank all our employees for their efforts and tremendous contribution during the challenging, but very successful, 2022. As always, we remain focused on operating responsibly and ethically and creating sustainable long-term value for all our stakeholders .”
| US$ million | 2022 | 2021 | Change % |
| Key statement of income and cash flows highlights1: | |||
| Revenue | 255,984 | 203,751 | 26 |
| Adjusted EBITDAâ—Š | 34,060 | 21,323 | 60 |
| Adjusted EBITâ—Š | 26,657 | 14,495 | 84 |
| Net income for the year attributable to equity holders | 17,320 | 4,974 | 248 |
| Earnings per share (Basic) (US$) | 1.33 | 0.38 | 250 |
| Funds from operations (FFO)â—Š | 28,938 | 17,057 | 70 |
| US$ million | 31.12.2022 | 31.12.2021 | Change % |
| Key financial position highlights: | |||
| Total assets | 132,583 | 127,510 | 4 |
| Total equity | 45,219 | 36,917 | 22 |
| Net fundingâ—Š | 27,500 | 30,837 | (11) |
| Net debtâ—Š | 75 | 6,042 | (99) |
| Ratios: | |||
| Net debt to Adjusted EBITDAâ—Š | 0.00 | 0.28 | (99) |
1 Refer to basis of presentation on page 6.
â—Š 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 116 for definitions and reconciliations and to note 2 of the financial statements for reconciliation of Adjusted EBIT/EBITDA.
STRONG FINANCIAL PERFORMANCE
– $34.1 billion Adjusted EBITDA, up 60% year-on-year (y/y), underpinned by robust Marketing and Industrial results
– Net income, pre-significant items: $18.9 billion, up 107%
– Post significant items, Net income attributable to equity holders was $17.3 billion, up 248%. Significant items reflect various impairments recorded and a gain on the acquisition of Cerrejón
– Net cash purchase and sale of PP&E: $4.5 billion, up 19%
– Shareholder returns of $7.1 billion (c.$0.56/share) announced, comprising a proposed $0.40/share ($5.1 billion) base distribution in respect of 2022 cash flows, alongside an additional ‘top-up’ $0.5 billion ($0.04/share) cash distribution and a new $1.5 billion (c$0.12/share) share buyback programme
RECORD INDUSTRIAL ASSET ADJUSTED EBITDA CONTRIBUTION
– Industrial Assets Adjusted EBITDA $27.3 billion, up 59%, primarily reflecting a $13.0 billion increase from energy products, in line with significantly higher coal prices, as well as the Cerrejon partner buy-out contribution
– Metals $9.3 billion, down $2.7 billion, reflecting higher costs and lower volumes; Energy $18.6 billion, up $13.0 billion (+232%)
– Unit cost results: Cu 80¢/lb (+13¢/lb y/y); Zn 38¢/lb (+42¢/lb y/y, whereby 2022 is net of 23¢/lb of non-cash inventory adjustments); Ni 631¢/lb (+177¢/lb y/y); coal $79/t ($166/t margin)
RECORD MARKETING RESULTS
– Marketing Adjusted EBIT $6.4 billion, up 73% y/y
– Energy Adjusted EBIT: $5.2 billion (+273%), as already tight post-pandemic energy markets were jolted by significant dislocation, generating extreme volatility in oil, refining margins, freight, gas and coal, with prices (absolute and in relation to quality and location differentials) reaching multi-year highs or records in many cases
– Metals Adjusted EBIT: $1.6 billion (-34%), mainly reflecting challenging conditions arising from China’s prolonged Covid-19 lockdowns as well as higher overall inflation, triggering tighter monetary conditions and demand uncertainty
– Glencore’s equity accounted share of Viterra rose 4% to $494 million
STRONG 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 top-up cash distributions / buybacks, as appropriate.
– Year-end Net debt of $0.1 billion allows for $2.0 billion of additional shareholder returns under our “top-up” framework, taking into account the base distribution of $5.1 billion and $2.9 billion of pro-forma debt-like other cash commitments at year-end
– Net debt to Adjusted EBITDA of 0.00x
– Available committed liquidity of $13 billion; bond maturities capped at c.$3 billion in any given year
– Spot illustrative annualised free cash flow generation of c.$10.6 billion from Adjusted EBITDA of c.$22.6 billion
CLIMATE AMBITION
– Extensive stakeholder engagement on progress with our Climate Action Transition Plan during the year.
– There was broad support for our climate strategy, recognising the importance of maintaining a strategy that remains resilient to the risks and opportunities of the evolving energy transition, and encouragement to continue our focus on progressing towards our ambition of achieving a net zero total emissions footprint by 2050.
– A limited number of shareholders looked for opportunities to accelerate our current total emissions reduction pathway (50% reduction by 2035), while some raised the prospects for incremental growth in our coal production. However, the overwhelming majority of shareholders reiterated their support for our current responsibly managed coal decline strategy and associated targets.
– Our emissions reduction targets remain sector leading for total emissions (Scope 1+2+3) along with our ambition to achieve Net-zero total emissions by 2050, with a supportive policy environment.
– Our strategy of responsibly depleting our coal portfolio over time reflects our belief that the energy transition will be non-linear through time and geography, with the responsible decline of our coal portfolio meeting critical energy needs through this evolution.
– We will continue to engage with our stakeholders as we progress the implementation of our strategy and respond to the global challenges of climate change and the energy transition.
To view the full report please click here: https://www.glencore.com/dam/jcr:be9ac3b7-a19c-4925-9554-3db0733101e4/GLEN-2022-Preliminary-Results.pdf
For further information please contact:
| Investors | ||||||
| Martin Fewings | t: +41 41 709 2880 | m: +41 79 737 5642 | martin.fewings@glencore.com | |||
| Media | ||||||
| Charles Watenphul | t: +41 41 709 2462 | m: +41 79 904 3320 | charles.watenphul@glencore.com | |||
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