Glencore Plc · LSE:GLEN
Glencore — FY2021 Earnings Presentation
39 slides from Glencore's earnings presentation, Feb 15, 2022
Slide 1: 2021 Preliminary Results
2021 Preliminary Results 15 February 2022 Nickel Raglan, Canada
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: Highlights
01 Highlights Gary Nagle Chief Executive Officer
Slide 4: 2021 scorecard
HIGHLIGHTS 2021 scorecard Financial ($bn) Industrial Marketing 21.3 +84% 13.1 +204% • Increased demand, constrained supply and inventory • Record 2021 performance, above our long-term guidance Adj.EBITDA(1) Equity FCF(2) drawdowns led to significantly range higher commodity prices 17.1 +118% 6.0 -62
Slide 5: ESG scorecard
HIGHLIGHTS ESG scorecard Environment Social Governance Sector leading approach to SafeWork relaunched to address We have dedicated substantial climate change historical safety performance resources over the last few years to • Unfortunately, we report the loss of four build and implement a Best-in-
Slide 6: Financial Performance
02 Financial Performance Steven Kalmin Chief Financial Officer Nickel Nikkelverk, Norway
Slide 7: Financial scorecard
2021 FINANCIAL PERFORMANCE Financial scorecard $bn 2021 2020 Chg Adj. EBITDA(1) 21.3 11.6 84% Industrial 17.1 7.8 118% Adj. EBITDA Marketing 3.7 3.3 11% Adj. EBIT Net Income 5.0 -1.9 n.m. Net Income 9.1 2.5 267% pre-sig. items Funds from 17.1 8.3 105% Operations Equity 13.0 4.3 203% Free Cash Flow(2
Slide 8: Industrial: Adjusted EBITDA $17.1bn
2021 FINANCIAL PERFORMANCE Industrial: Adjusted EBITDA $17.1bn Industrial Assets EBITDA mining margins • Adjusted EBITDA up 118% to $17.1bn • Underpinned by significantly higher 20 20 Segmental Adj. EBITDA 21 20 commodity prices with many reaching record or multi-year highs, amid widespread supply/d
Slide 9: Industrial: Adjusted EBITDA bridge
2021 FINANCIAL PERFORMANCE Industrial: Adjusted EBITDA bridge - 0.3 - 0.9 - 0.5 - 0.1 Price: +$11.1bn • Stronger average commodity prices: > Newcastle thermal coal: +125%, Cobalt: +60%, Copper: +51%, Zinc: +32%, Nickel: +34%, + 11.1 Ferrochrome: +61%, Brent oil: +65% Volume: -$0.3bn • Recovery from
Slide 10: Industrial: copper
2021 FINANCIAL PERFORMANCE Industrial: copper Strong financial performance, Own source production (kt) underpinned by higher copper y/y 2022 and cobalt prices Operating 2021 Chg 2020 Guidance 1371 1258 1196 • Production -5%, mainly Production (kt) 1,195.7 -5% 1,258.1 1,150 ± 30 1150 reflecting the s
Slide 11: Industrial: zinc
2021 FINANCIAL PERFORMANCE Industrial: zinc Improved zinc contribution Own source production (kt) supported by higher y/y 2022 commodity prices Operating 2021 Chg 2020 Guidance 1170 Production (kt) 1117.8 -4% 1170.4 1,110 ± 30 1118 1110 • Production -4%, mainly 1078 reflecting the slower than Mine c
Slide 12: Industrial: nickel
2021 FINANCIAL PERFORMANCE Industrial: nickel Stronger nickel performance Own source production (kt) with lower production more y/y 2022 than offset by higher primary Operating 2021 Chg 2020 Guidance 121 115 and by-product prices Production (kt) 102.3 -7% 110.2 115 ± 5 110 102 • Production 7% lower,
Slide 13: Industrial: coal
2021 FINANCIAL PERFORMANCE Industrial: coal y/y 2022 Lower coal production Operating 2021 Chg 2020 Guidance Own source production (kt) volumes more than Production (Mt) 103.3 -3% 106.2 121 ± 4 compensated by the sharp Thermal FOB 140 increase in received export 52.9 15% 45.9 59.3 cash cost ($/t)(1)
Slide 14: Marketing: Adjusted EBIT $3.7bn
2021 FINANCIAL PERFORMANCE Marketing: Adjusted EBIT $3.7bn Marketing Adjusted Marketing divisions 2021 Adjusted EBIT of $3.7 billion, up 11% y/y EBIT ($ billion) Adjusted EBIT ($ billion) • Strong performances from all major 2.5 commodity departments, in line with $3.7bn favourable market fundamenta
Slide 15: Capital allocation: Capital structure
2021 FINANCIAL PERFORMANCE Capital allocation: Capital structure 10 Net debt Target: optimal leverage 19.7 ($ billion) Net debt managed around a $10bn cap with 17.6 sustainable deleveraging (after base distribution) 16 (3) below the cap periodically returned to shareholders 16.3 15.8 via special dis
Slide 16: Capital allocation: Shareholder returns
2021 FINANCIAL PERFORMANCE Capital allocation: Shareholder returns 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 2021 Base Top-up results results Distribution Returns Is
Slide 17: Capital allocation: Business reinvestment
2021 FINANCIAL PERFORMANCE Capital allocation: Business reinvestment 2021 Net purchase and sale of property, plant and Key expansionary capital projects: 2022-24 equipment • Copper: Collahuasi desalination • $3.8bn net capex cash outflow, -3% y/y • Zinc: Zhairem, Dolinnoe-Obruchevskoye • Investment
Slide 18: 2022F Mine unit cash costs/margins
2022 MODELLING GUIDANCE 2022F Mine unit cash costs/margins(1,2) Copper Zinc Nickel Coal $/lb total cash cost $/lb total cash cost $/lb total cash cost $/t Thermal FOB cash cost 0.41 -0.08 4.11 59.3 $0.31/lb ex Au $2.55/lb ex Koniambo • Forecast first quartile position • Forecast first quartile posit
Slide 19: Illustrative 2022F spot annualised cashflows
2022 MODELLING GUIDANCE Illustrative 2022F spot annualised cashflows(1) Copper Adj.EBITDA Group Adj.EBITDA $8.2bn 964kt Cu @ $3.86/lb margin $26.5 Zinc Adj.EBITDA bn $3.1bn 804kt Zn @ $1.73/lb margin Nickel Adj.EBITDA $1.7bn 115kt Ni @ $6.69/lb margin Illustrative spot FCF $14.1 Coal Adj.EBITDA $10.
Slide 20: Uniquely Positioned
04 Uniquely Positioned Gary Nagle Chief Executive Officer Nickel Nikkelverk, Norway
Slide 21: The right elements to succeed in a net zero economy
UNIQUELY POSITIONED The right elements to succeed in a net zero economy We have the raw materials the world needs We produce, recycle, source, market and distribute the commodities needed by our suppliers and customers to decarbonise, while simultaneously reducing our own emissions We are present at
Slide 22: Our 2022 Priorities
UNIQUELY POSITIONED Our 2022 Priorities 1 2 3 Safety Climate 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 23: Appendix
05 Appendix Nickel Nikkelverk, Norway
Slide 24: Key sustainability performance indicators
APPENDIX Key sustainability performance indicators(1) Performance Topic indicator Target 2021 2020 Trend Health and safety Fatalities No fatalities 4 8 LTIFR 0.83 0.94 TRIFR 2.4 2.7 Occupational Year-on-year reduction in the number of new occupational disease 109 124 diseases cases Environme
Slide 25: February 2021 announced shareholder returns calculation
APPENDIX February 2021 announced shareholder returns calculation(1) $bn Marketing Industrial Corporate Total EBITDA 4.2 17.1 21.3 Unrealised inter-segment profit -0.5 -0.5 Net cash interest allocation -0.3 -0.6 -0.9 Cash tax allocation -0.4 -2.3 -2.7 Viterra (earnings less dividend) -0.3 -0.3 Other
Slide 26: Distribution timetable
APPENDIX Distribution timetable $0.13 per share first tranche of $0.26 per share base distribution H1 2022 Applicable exchange rate reference date (Johannesburg Stock Exchange (JSE) 14 April Applicable exchange rate announced on the JSE 19 April Last day to effect removal of shares cum distribution
Slide 27: Illustrative spot annualised FCF
APPENDIX Illustrative spot annualised FCF Group $bn Cu (5) Zn (6) Total copper production (kt) 1,150 Total zinc production (kt) 1,110 Copper 8.2 Cu from other depts (kt) -186.1 Zn from Cu dept (kt) -140 Net relevant production (kt) 963.9 Payability deduction (kt) -165 Nickel 1.7 Spot price – 96% pay
Slide 28: Production guidance
2022 MODELLING GUIDANCE Production guidance(1) Copper (kt) Zinc (kt) Cobalt (kt) 48 50 50 1196 1118 1110 1110 1180 ±3 1150 ±30 ±30 1120 915 31 2021 2022F 2023F 2024F 2021 2022F 2023F 2024F 2021 2022F 2023F 2024F Nickel (kt) Ferrochrome (kt) Coal (Mt) 135 122.0 122.0 1480 1480 121.0 120 1468 1460 115
Slide 29: Listed entity market valuations
APPENDIX Listed entity market valuations Listed entities(1) % owned Market value $M EN+ 10.6% 847 Volcan 23.3% 386 Rosneft 0.6% 466 Century 47.4% 769 Yancoal 6.8% 194 Other(2) Various 201 Total 2,863 (1) Source Bloomberg – 9 February 2022. (2) Other includes Trevali, Polymet and Merafe 2021 Prelimin
Slide 30: Viterra overview
APPENDIX Viterra overview Who we are A global leader in the origination, handling, processing and marketing of agricultural commodities and products Sales volumes Global crush capacity Key market positions in major growing regions 90 Mt 13.5 Mt Wheat, corn, barley, Total Viterra capacity soybeans an
Slide 31: Ethics and compliance
APPENDIX Ethics and compliance We are Our Group Compliance team, committed to We have dedicated which is independent of the upholding a We have made business, supports the substantial resources significant investments implementation of the programme culture of over the last few years to in complianc
Slide 32: Our strategy
Appendix Our strategy The right strategy > enabling We have aligned our future to the goal that decarbonisation shapes all of ours – achieving a Paris aligned pathway to limit the global temperature increase to 1.5°C by 2050 > help meet demand Our business model is uniquely placed to for everyday me
Slide 33: Pathways to achieve our carbon emissions reduction commitments
APPENDIX Pathways to achieve our carbon emissions reduction commitments Managing our Reducing Prioritising Collaborating Supporting Improving Transparent operational Scope 3 capital for with our uptake and resource approach footprint emissions transition supply chains integration of efficiency metal
Slide 34: Delivering our strategy: prioritising transition metals
APPENDIX Delivering our strategy: prioritising transition metals Major project growth pipeline by Measured and Indicated Resource(1) – kt Cu eq(2) equity share Norman West Raglan Phase 3(3) Mount Isa Cu UG Extension Extensive portfolio of MARA project (Agua Rica) Mutanda Nickel Rim South Extension t
Slide 35: Delivering our strategy: simplifying and aligning our portfolio
APPENDIX Delivering our strategy: simplifying and aligning our portfolio Current state of play Our 150+ operating sites are contained within 72 assets Detailed portfolio review to identify the 9 Disposals Transactions signed/closed include Mopani, Ernest Henry, Chad E&P, Chemoil US terminals, Karade
Slide 36: Reducing our operational emissions footprint
APPENDIX Reducing our operational emissions footprint Scope 1+2 emissions 2019 baseline: 29.2Mt Purchased electricity As a vertically integrated producer of metals, consumption of electricity by our smelting assets is a key focus of our decarbonisation plans 37% 18% 16% We will shift consumption to
Slide 37: Reducing our operational emissions footprint (cont)
APPENDIX Reducing our operational emissions footprint (cont) Our commodities and geographies are biased towards a value accretive decarbonisation pathway Our larger assets are well positioned for Declining coal volumes lower our sourcing renewable energy (RE) Value accretive Scope 1+2 abatement expo
Slide 38: Our portfolio's resilience to carbon prices
APPENDIX Our portfolio’s resilience to carbon prices Carbon price impact on industry cost curves(1) The cost curves for our key transition metals Per cent increase in total mine cash costs are resilient to the impact of carbon prices • Carbon prices of up to $200/t by 2040 Copper Zinc Nickel increas
Slide 39: Footnotes
APPENDIX Footnotes Slide 27: Totals may not add due to rounding. (1) Other industrial EBITDA includes Ferroalloys, Oil and Aluminium less c.$400M corporate SG&A. (2) Marketing Adjusted EBITDA of $3.0bn is calculated from the mid-point of the $2.2-$3.2bn EBIT guidance range plus $300M of Marketing D+