Glencore Plc · LSE:GLEN
Glencore — H1 2022 Earnings Presentation
32 slides from Glencore's earnings presentation, Aug 4, 2022
Slide 1: 2022 Half-year results
2022 Half-year results 4 August 2022
Slide 2: Important notice concerning this document including forward looking statements
IMPORTANT NOTICE CONCERNING THIS DOCUMENT INCLUDING FORWARD LOOKING STATEMENTS This document contains statements that are, or may be deemed to be, “forward looking statements” which are prospective in nature. These forward looking statements may be identified by the use of forward looking terminolog
Slide 3: Overview H1 2022
Overview H1 2022
Slide 4: 2022 Half-year scorecard
OVERVIEW 2022 Half-year scorecard Financial ($bn) Industrial Marketing 18.9 +119% 2.3 -62% • Extraordinary surge in coal prices and addition of Cerrejón minority • Record 2022 H1 performance, above our long-term annual Adj.EBITDA(1) Net debt(2) interests underpinned the 127% guidance range increase
Slide 5: 2022 Half-year ESG scorecard
OVERVIEW 2022 Half-year ESG scorecard Environment Social Governance Progressing our decarbonisation We continue to believe that we US, UK and Brazilian investigations pathway: can and must eliminate all resolved during H1 fatalities and will continue to drive We acknowledge the misconduct • Locked i
Slide 6: Half-year financial performance H1 2022
Half-year financial performance H1 2022
Slide 7: Financial scorecard
2022 HALF-YEAR FINANCIAL PERFORMANCE Financial scorecard $bn 2022 H1 2021 H1 Chg Adj. EBITDA(1) 18.9 8.7 119% Industrial Adj. EBITDA 15.0 6.6 127% Marketing Adj. EBIT 3.7 1.8 104% Net Income 12.1 1.3 846% Net Income 10.8 3.2 238% pre-sig. items Funds from Operations 15.4 7.3 111% Cash generated by 1
Slide 8: Industrial: Adjusted EBITDA $15.0bn
2022 HALF-YEAR FINANCIAL PERFORMANCE Industrial: Adjusted EBITDA $15.0bn Industrial Assets Metals and Minerals segment Energy Products segment • Adjusted EBITDA up 127% to • Adjusted EBITDA of $5.9bn, flat • Adjusted EBITDA of $9.5bn, up $15.0bn p/p, with higher prices $8.4bn, primarily reflecting •
Slide 9: Industrial: Adjusted EBITDA bridge
2022 HALF-YEAR FINANCIAL PERFORMANCE Industrial: Adjusted EBITDA bridge + 0.3 - 0.6 + 0.3 + 0.1 + 8.3 15.0 6.6 2021 H1 Price Volume Cost FX Other 2022 H1 Price: +$8.3bn: Volume: +$0.3bn: Cost: -$0.6bn: FX: +$0.3bn: Stronger average Additional Cerrejón volumes Primarily ‘commodity’ linked inflationar
Slide 10: Industrial: Copper
2022 HALF-YEAR FINANCIAL PERFORMANCE Industrial: Copper Lower contribution in line with reduced production volumes H1 y/y H1 2022 • Production -15%, reflecting the sale of Ernest Henry, Operating 2022 Chg 2021 Guidance geotechnical constraints at Katanga, Collahuasi mine sequencing and lower product
Slide 11: Industrial: Zinc
2022 HALF-YEAR FINANCIAL PERFORMANCE Industrial: Zinc Lower zinc contribution driven by higher costs H1 y/y H1 2022 and lower production Operating 2022 Chg 2021 Guidance • Production -17%, reflecting progressive Production (kt) 480.7 -17% 581.8 1,010 ± 30 reduction in the South American portfolio Un
Slide 12: Industrial: Nickel
2022 HALF-YEAR FINANCIAL PERFORMANCE Industrial: Nickel Stronger nickel contribution supported by higher volumes and prices H1 y/y H1 2022 • Production +21%, reflecting operation of both Operating 2022 Chg 2021 Guidance production lines at Koniambo, as well as Production (kt) 57.8 21% 47.7 118 ± 5 n
Slide 13: Industrial: Coal
2022 HALF-YEAR FINANCIAL PERFORMANCE Industrial: Coal Exceptional financial performance underpinned H1 y/y H1 2022 by higher prices Operating 2022 Chg 2021 Guidance • Production +14%, primarily reflecting higher Production (Mt) 55.4 14% 48.8 121 ± 5 production from Cerrejón (33% to 100%), following
Slide 14: Marketing: Adjusted EBIT $3.7bn
2022 HALF-YEAR FINANCIAL PERFORMANCE Marketing: Adjusted EBIT $3.7bn 2022 H1 Adjusted EBIT of $3.7 billion, up 104% p/p Energy Products: Metals and Minerals: • Successfully navigated the extraordinary first half global +$3.0bn, +344%, +$1.0bn, -17%, challenges as already tight post- reflecting chall
Slide 15: Capital allocation: Balance sheet
2022 HALF-YEAR FINANCIAL PERFORMANCE Capital allocation: Balance sheet Optimised capital structure provides balance sheet strength and flexibility • Committed available liquidity of $12.5bn 2022 2021 $bn Chg • FFO +111% to $15.4 bn H1 FY • Net funding and Net debt of $28.0bn and $2.3bn, down $2.9bn
Slide 16: Capital allocation: Balance sheet - change in Net debt & working capital
2022 HALF-YEAR FINANCIAL PERFORMANCE Capital allocation: Balance sheet - change in Net debt & working capital H1 2022 movement in Net debt ($bn)(1) Higher net working capital during the period reflects materially higher oil, coal and gas prices and their elevated market volatilities Marketing accoun
Slide 17: Capital allocation: Shareholder returns
2022 HALF-YEAR FINANCIAL PERFORMANCE Capital allocation: Shareholder returns $10bn Optimal Net debt level of $10 billion with deleveraging below this cap periodically returned to shareholders via special distributions/buybacks as appropriate(2) Top-up calculation $bn Net debt at 30 June 2022 2.3 $0.
Slide 18: Capital allocation: Business reinvestment
2022 HALF-YEAR FINANCIAL PERFORMANCE Capital allocation: Business reinvestment 2022 H1 Net purchase and sale of PP&E Key expansionary capital projects: 2022-24 • $2.0bn net capex cash outflow, +16% p/p • Investment in energy transition commodities: • Copper: Collahuasi desalination >75% metals in 20
Slide 19: Guidance 2022
Guidance 2022
Slide 20: Production guidance
2022 GUIDANCE Production(1) Copper (kt) Zinc (kt) Cobalt (kt) 549.8 529.3 24.3 52% 52% 54% 1060.0 1010.0 45.0 ± 30 ± 30 ±3 510.2 480.7 20.7 48% 48% 46% 2022F H1 2022 H2 2022F 2022F H1 2022 H2 2022F 2022F H1 2022 H2 2022F Nickel (kt) Ferrochrome (kt) Coal (Mt) 714 65.6 60.2 48% 51% 54% 118.0 1500 121
Slide 21: Mine unit cash costs/margins
2022 GUIDANCE Mine unit cash costs/margins(1) Copper Zinc Nickel Coal $/lb total cash cost $/lb total cash cost $/lb total cash cost $/t Thermal FOB cash cost 0.93 0.29 5.64 79.4 $0.63/lb ex Au $3.59/lb ex Koniambo Higher 2022F cost position Higher 2022F costs in line with Increased costs reflect lo
Slide 22: Illustrative spot annualised cashflows
2022 GUIDANCE Illustrative spot annualised cashflows(1) Copper Adj.EBITDA Group Adj.EBITDA $5.1bn 915kt Cu @ $2.52/lb margin $32.3 Zinc Adj.EBITDA bn $2.0bn 719kt Zn @ $1.26/lb margin Nickel Adj.EBITDA $1.4bn 118kt Ni @ $5.26/lb margin Illustrative spot FCF $18.0 Coal Adj.EBITDA $20.1bn 121Mt Coal @
Slide 23: Uniquely positioned
Uniquely positioned
Slide 24: The right business model for the needs of today and tomorrow
UNIQUELY POSITIONED The right business model for the needs of today and tomorrow The world’s decarbonisation pathways will be non-linear through time and across geographies Our responsible coal strategy, together with our key transition metals and recycling strategy, is critical to meeting the energ
Slide 25: Our 2022 priorities
UNIQUELY POSITIONED Our 2022 priorities 1 Safety 2 Climate 3 Efficiency & discipline Our ambition is to prevent Progressing along our core Operational fatalities, occupational diseases pathways to achieve our Deliver expected operational and injuries wherever we climate commitments: volumes with goo
Slide 26: Appendix
Appendix
Slide 27: 2022 H1 costs/margin reconciliation
APPENDIX 2022 H1 costs/margin reconciliation(1) Cu Production (kt) 510.2 Copper from other depts (kt) 67.8 Net production (kt) 442.4 Net relevant sales (kt) 440.0 Group Realised copper price (c/lb) 393.0 Unit cash cost (c/lb) 53.7 H1 margin (c/lb) 339.3 H1 margin ($/t) 7480 Copper EBITDA ($M) 3291 $
Slide 28: Illustrative spot annualised FCF
APPENDIX Illustrative spot annualised FCF Cu 2022F production (kt) 1060.0 Copper from other depts (kt) -145.0 (1) Net production (kt) 915.0 Group Forecast sales (kt) 915.0 Spot LME Cu (96% payable) (c/lb) 345.3 Unit cash cost guidance (c/lb) 93.0 FY margin (c/lb) 252.3 $bn FY margin ($/t) 5563 Illus
Slide 29: Capital allocation: Shareholder returns framework
APPENDIX Capital allocation: Shareholder returns framework Predictable minimum shareholder returns grounded on a formulaic base distribution, topped up as the balance sheet allows 1 2 Shareholder returns calculation flowsheet Full-year Half-year Base Top-up results results Distribution Shareholder I
Slide 30: Distribution timetable
APPENDIX Distribution timetable $0.13 per share second tranche of 2021 base distribution + H2 2022(1) $0.11 per share special distribution Applicable exchange rate reference date (Johannesburg Stock Exchange (JSE) 26 August Applicable exchange rate announced on the JSE 29 August Last day to effect r
Slide 31: Footnotes
APPENDIX Footnotes Slide 28: Totals may not add due to rounding. (1) Copper spot annualised Adjusted EBITDA calculated basis mid-point of 2022 production guidance on Slide 20 adjusted for copper produced by other departments. Spot copper price as at 1 August 2022, by-products and FX as at 26 July 20
Slide 32: For more information
APPENDIX For more information 2022 Half-year results 32