Glencore Plc · LSE:GLEN
Glencore — H1 2020 Earnings Presentation
33 slides from Glencore's earnings presentation, Aug 6, 2020
Slide 1: 2020 Half-Year Results
2020 Half-Year Results 6 August 2020
Slide 2: Important notice concerning this document including forward looking statements
1 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 terminol
Slide 3: Highlights
2 Highlights Ivan Glasenberg – Chief Executive Officer 2020 Half-Year Results
Slide 4: 2020 Half-Year Scorecard
2020 Half-Year Scorecard 3 Strong performance in challenging conditions Resilient cash generation … • Group Adjusted EBITDA(1) of $4.8bn, down 13% in line with lower prices and some Covid-19 production/cost impacts, offset by a strong marketing performance • Cash generated by operating activities be
Slide 5: Safety performance
Safety performance 4 • We are progressing with an enhanced group- wide fatality reduction program seeking to deliver a step-change in safety performance • Identifying and targeting areas of underperformance with clear plans and structures to deliver safe work places • Ensuring SafeWork is fully impl
Slide 6: Our commitment to the transition to a low-carbon economy
Our commitment to the transition to a low-carbon economy 5 Aligning our business with a Paris compliant pathway(1) Our diversified portfolio of metals and minerals is 2019 Peer Scope 3 emissions (Million tonnes CO2-e)(2) well positioned to support the transition to a low- 600 carbon economy • We are
Slide 7: 2020 Half-Year financial performance
2020 Half-Year financial performance Steven Kalmin – Chief Financial Officer 2020 Half-Year Results
Slide 8: 2020 First-half financial scorecard
2020 First-half financial scorecard 7 Resilient financial performance Adjusted EBITDA ($)(1) Industrial Adj. EBITDA ($) Marketing Adj. EBIT ($) 4.8bn -13% y/y, reflecting lower commodity prices 2.6bn -42%, primarily driven by lower y/y 2.0bn +108% y/y, in line with volatile and and some Covid-19 pro
Slide 9: Industrial 2020 Half-Year Adjusted EBITDA: $2.6bn
Industrial 8 2020 Half-Year Adjusted EBITDA: $2.6bn Weaker pricing environment Industrial Adjusted EBITDA • Adjusted EBITDA down 42% to $2.6bn • Industrial assets primarily impacted by lower commodity $4.5bn EBITDA mining margins prices and some Covid-19 related volume and cost 2.1 impacts, partiall
Slide 10: Industrial Adjusted EBITDA bridge
Industrial 9 Adjusted EBITDA bridge Variance 2020 Half-Year vs 2019 Half-Year ($ million) 2,069 Volume: 4,499 Reflects Covid-19 Metals: 832 impacts at Antamina, Colombian coal and Ferroalloys, FX: Energy: 1237 plus expected lower Mainly: grades at AUD +c.$160M Antapaccay 136 ZAR +c.$160M 423 2,618 P
Slide 11: Industrial Copper scorecard
Industrial 10 Copper scorecard Resilient copper performance, H1 y/y H1 2020 aided by turnaround at Operating 2020 Chg 2019 Guidance Katanga Production (kt) 588 -11.3% 663 1255 ± 35 Production 11% lower y/y, mainly Mine costs (c/lb)(1) 109 -27.3% 150 106 reflecting C+M of Mutanda (H2 19), Realised pr
Slide 12: Industrial Zinc scorecard
Industrial 11 Zinc scorecard Lower zinc results in line with H1 y/y H1 2020 weaker prices and Covid-19 Operating 2020 Chg 2019 Guidance operational impacts Production (kt) 550.1 2.6% 535.9 1160 ± 30 Production up y/y, but below initial Mine costs (c/lb) 28 n.m. 2.3 5 guidance mainly due to Covid-19
Slide 13: Industrial Nickel scorecard
Industrial 12 Nickel scorecard Lower unit costs drive H1 y/y H1 2020 stronger nickel earnings Operating 2020 Chg 2019 Guidance Production (kt) 55.2 -0.4% 55.4 114 ± 4 Steady y/y production, but Koniambo ramp-up impacted by Covid-19 Mine costs (c/lb) 395 -13.9% 459 413 delays to mobility of maintenan
Slide 14: Industrial Coal scorecard
Industrial 13 Coal scorecard Coal significantly impacted by H1 y/y H1 2020 Covid-19 effects on economic Operating 2020 Chg 2019 Guidance activity and energy demand Production (Mt) 58.1 -15% 68.2 114 ± 3 Production 10.1Mt lower y/y, with Thermal FOB cost ($/t) 46.2 0.4% 46.0 46.4 Covid-19 particularl
Slide 15: Marketing 2020 Half-Year Adjusted EBIT: $2.0bn
Marketing 14 2020 Half-Year Adjusted EBIT: $2.0bn Record first-half Adjusted EBIT of $2.0bn, up 108% y/y, Marketing Adjusted EBIT ($bn) as oil, in particular, benefitted from the volatile and structurally supportive market conditions $2.0bn 3.5 118(1) 3.2 Metals and Minerals Adjusted EBIT +127% 1266
Slide 16: Capex
Capex 15 H1 2020 net cash PP&E: $1.7bn H1 2020 Net cash capex ($M) H1 2020 Industrial sustaining capex • $1.3bn 2020 Half Year Marketing capex (mostly H1 2020 Industrial expansionary capex leases) • $0.5bn H1 2020 Net purchase and sale of property, plant and Sale of PP&E equipment • $1.7bn net capex
Slide 17: Balance sheet
Balance sheet 16 Net debt temporarily higher Net debt temporarily $2.8bn(1) above our target $16bn cap, Net funding ($) Net debt ($) reflecting: • Oil working capital reset in a significantly lower oil price and demand environment – significant reduction in net oil 36.4bn +6% vs year end 2019; 19.7b
Slide 18: Capital allocation
Capital allocation 17 Balancing shareholder returns, capital structure and growth H1 2020 Capital allocation H1 2020 capital allocation - cash ($bn) Funds from Growth/Reinvestment operations Non-RMI Net working capital • $1.7bn – Net capex cash flow +3.7 movement Non-RMI working capital Cash • $3.1b
Slide 19: 2020 Modelling guidance
2020 Modelling guidance 2020 Half-Year Results
Slide 20: 2020 unit cash costs/margins
2020 unit cash costs/margins 19 Key commodities Copper Zinc Nickel Coal Production: 1.26Mt ± 35kt Production: 1.16Mt ± 30kt Production: 114kt ± 4kt Production: 114Mt ± 3Mt Unit costs: 106 ¢/lb(1) Unit costs: 5 ¢/lb (48 ¢/lb ex Au) Unit costs: 413 ¢/lb Unit costs: Thermal FOB cash Unit costs ex-Konia
Slide 21: Production Update 2020 guidance
Production Update 20 2020 guidance Group guidance – own source(1) Actual Current Previous Q1 Q2 ROY H1 guidance guidance 2020 2020 2020 2020 2020 2020 Copper kt 293 295 588 667 ± 35 1,255 ± 35 1,255 ± 45 Cobalt kt 6 8 14 14 ± 2 28 ± 2 28 ± 2 Zinc(2) kt 296 255 550 610 ± 30 1,160 ± 30 1,160 ± 30 Nick
Slide 22: Illustrative "spot" annualised cashflows
Illustrative “spot” annualised cashflows 21 Basis: Current 2020 production guidance and late July spot commodities/FX Group $bn Copper(5) Guidance Zinc(6) Guidance Copper EBITDA 4.1 Total copper production (kt) 1255 Total production (kt) 1160 Cu from other depts (kt) -110 Zn from Cu department (kt)
Slide 23: Our priorities
Our priorities 2020 Half-Year Results
Slide 24: Our 2020 priorities
Our 2020 priorities 23 Operating Ramp-up / Strong Health & efficiency & development balance Management Confidence safety Capital assets sheet discipline • Deliver a step- • Deliver Katanga • Deliver guided • Commitment to • Transition to • Stability and change in safety 2020 guidance of operational
Slide 25: Q&A
Q&A 2020 Half-Year Results
Slide 26: Appendix
Appendix 2020 Half-Year Results
Slide 27: 2020 Half-Year Industrial mine costs/margin reconciliation
2020 Half-Year Industrial mine costs/margin reconciliation 26 H1 2020 H1 2020 H1 2020 H1 2020 (1) (1) Copper Guidance Actual Zinc Guidance Actual Total copper production (kt) - (FY 1255*48%) 602 588 Total production (kt) - (FY 1160*50%) 580.0 550.1 Cu from other depts (kt) - (110*50%) -55 -49 Zn fro
Slide 28: 2020 key EBITDA sensitivities
2020 key EBITDA sensitivities 27 Approximate estimated impact on H2 EBITDA of a 10% change: $M Copper price 400 Australian export thermal coal price 90 Australian hard coking coal price 45 Zinc price 120 Cobalt price 50 Nickel 70 AUD vs USD 330 ZAR vs USD 60 CAD vs USD 65 CLP vs USD 30 2020 Half-Yea
Slide 29: Future growth options
Future growth options 28 Significant pipeline of internal brownfield and greenfield growth options for when markets inevitably require these commodities Cu Co Zn Coroccohuayco: Peru Mutanda sulphides: DRC Volcan projects: Peru Argent: South Africa El Pachon: Argentina Obruchevskoye: Kazakhstan Nooit
Slide 30: Listed entity market valuations and selection of other entities
Listed entity market valuations and selection of other entities 29 Listed entities % owned Market value $M Russneft 25.0% 490 EN+ 10.6% 681 Volcan 23.3%(1) 374 Rosneft 0.6% 291 Century 47.4% 330 Yancoal 6.8% 133 Other(2) Various 197 Total 2496 Selection of other entities US oil infrastructure BaseCo
Slide 31: Debt maturity profile – capital market notes
Debt maturity profile – capital market notes 30 $22.3bn as at 30 June 2020(1) 10.0 10.2 8.0 6.0 Managing annual debt 4.0 maturities to around $3bn 2.0 0.0 Liquidity @ 2020 2021 2022 2023 2024 2025 2026 2027 post 2027 30.06.2020 USD EUR GBP CHF JPY 2020 Half-Year Results Notes: (1) Note 20, Pages 76
Slide 32: Glencore Technology: Technology solutions for our industry
Technology solutions for our industry 31 Glencore has been leading industry technology for decades: Primus, CTSCo, Onaping Depth electric mine GLENCORE TECHNOLOGY • Global leader in metals and minerals processing technology for • Team of world-class more than 30 years metallurgists, engineers, • Sup
Slide 33: GLENCORE =
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