18th Feb 2020 07:29
(Alliance News) - Glencore PLC's annual profit was hurt by weak commodity prices and trade uncertainty, the miner said Tuesday, though it did beat market forecasts.
Swiss firm Glencore, which also has a significant commodities trading unit, posted adjusted earnings before interest, tax, depreciation and amortisation of USD11.60 billion for 2019, 26% lower than the year before.
However, according to company-compiled analyst consensus the market had forecast adjusted Ebitda of USD11.25 billion.
Glencore's adjusted earnings before interest and tax fell 55% to USD4.15 billion, while it posted a net loss attributable to equity holders of USD404 million after a profit of USD3.41 billion the year before.
"Our performance in 2019 reflected the prolonged and uncertain trade deal negotiations, generally weaker prices for our key commodities and some operational challenges experienced at our ramp-up/development assets," said Chief Executive Ivan Glasenberg.
Glencore already had reported production figures for 2019 earlier in February. Copper production was down 6%, with nickel down 3%, but cobalt output rose 10%, zinc by 1%, and lead by 2%. Glencore's coal production was up 8% and oil production 19% higher.
The company's net debt remains above the USD10 billion to USD16 billion target range, standing at USD17.56 billion at the end of 2019. This is 19% higher than the figure a year earlier and was above market forecasts of USD17.12 billion.
Glencore's net debt to adjusted Ebitda ratio was 1.51 times at the end of 2019, well above the 1 times target and higher than the 0.93 times a year before.
Glencore declared no new share buyback, repeating prior guidance that a new programme will be started "as and when balance sheet capacity allows". It has proposed a 20 US cent dividend for 2020, the same as 2019, with the market forecasting a 18.34 cent payout.
The Industrial business, which includes all mining operations, posted a 32% fall in adjusted Ebitda to USD9.0 billion due to weaker prices, mainly from coal and cobalt. The market had seen a figure of USD8.72 billion.
Adjusted Ebit in the Marketing unit, which includes commodities trading, was 2% lower year-on-year at USD2.37 billion, boosted by a strong metals performance in the second half and "robust" oil results, offsetting a tough cobalt market in the first half.
The market had foreseen adjusted Ebit for the Marketing business of USD2.25 billion.
"Looking ahead, in the short-term, we are closely watching coronavirus developments and potential scenario impacts on global growth and markets. As shown over many cycles, our business has various defensive cash flow characteristics, stemming primarily from marketing activities, but also material exposure to precious metals and infrastructure and expected countercyclical working capital inflows," said CEO Glasenberg.
"Our priorities for 2020 remain being focused on delivering sustainable long-term returns for all stakeholders, including via delivering a step-change in safety performance, realising the potential of our ramp-up assets, seizing further operational efficiencies, strengthening our balance sheet and managing the transition to Glencore's next generation of leadership," added Glasenberg, who has been CEO for 18 years.
In a separate statement, Glencore said it is "well positioned" to transition to a low carbon economy, adding it is on track to reduce 2020 total greenhouse gas emissions by 10% compared to 2016 against a 5% reduction target.
Glencore is forecasting a 30% fall in "Scope 3" emissions by 2035. These emissions are all indirect emissions included in a company's value chain. It will be unveiling new Scope 1 and Scope 2 targets during 2020.
Scope 1 targets include all direct emissions from a company, and Scope 2 are indirect emissions from the generation of purchased energy.
By George Collard; [email protected]
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