# Glencore Plc Another strong financial performance

- Link: https://www.directorstalkinterviews.com/glencore-plc-another-strong-financial-performance/412756421
- Published: 2018-08-08T07:23:40+01:00
- Author: Charlotte Edwards

**[Glencore Plc](https://www.directorstalkinterviews.com/ftse-company/glencore-plc/glen.l)**(
[LON:GLEN](https://www.directorstalkinterviews.com/ftse-company/glencore-plc/glen.l)),
announced half year report for 2018.

**Highlights**

> **Glencore’s Chief Executive Officer, Ivan Glasenberg, commented:** “The strength
> of our diversified business model and commodity mix is once again demonstrated
> with a 13% increase in net income and a 23% increase in Adjusted EBITDA to $8.3
> billion.
> “Against a volatile but favourable trading and commodity price environment, Marketing
> performed towards the upper end of its guidance range with a 12% increase in Adjusted
> EBIT to $1.5 billion. Our Industrial business recorded Adjusted EBITDA of $6.7
> billion, up 26%, reflecting the highly competitive cost positions of our asset
> base.
> “Cash generation remains strong, with FFO up 8% to $5.6 billion and our balance
> sheet healthy, with Net debt of $9 billion. In addition to the $2.85 billion of
> shareholder distributions announced earlier this year, we recently announced a
> $1 billion buy-back programme.
> “While broader market conditions are likely to remain volatile, confidence in 
> our business prospects and current share trading levels point to near-term focus
> on deleveraging and shareholder returns / buybacks funded through cash generation.
> We remain focused on creating value for shareholders through the disciplined allocation
> of long-term capital.”

  |

US$ million

  |

H1 2018

  |

H1 2017

  |

Change %

  |

2017

  |  
 |

Key statement of income and cash flows highlights1:

  |

 |

 |

 |

 |  
 |

Net income attributable to equity holders

  |

2,776

  |

2,450

  |

13

  |

5,777

  |  
 |

Adjusted EBITDA◊

  |

8,270

  |

6,741

  |

23

  |

14,762

  |  
 |

Adjusted EBIT◊

  |

5,119

  |

3,801

  |

35

  |

8,552

  |  
 |

Earnings per share (Basic) (US$)

  |

0.19

  |

0.17

  |

12

  |

0.41

  |  
 |

Funds from operations (FFO)2◊

  |

5,625

  |

5,201

  |

8

  |

11,556

  |  
 |

Net cash generated by operating activities before working capital changes

  |

6,805

  |

5,599

  |

22

  |

11,866

  |  
 |

Capital expenditure◊

  |

2,165

  |

1,679

  |

29

  |

4,234

  |

  |

US$ million

  |

30.06.2018

  |

31.12.2017

  |

Change %

  |  
 |

Key financial position highlights:

  |

 |

 |

 |  
 |

Total assets

  |

134,464

  |

135,593

  |

(1)

  |  
 |

Net funding2◊

  |

31,894

  |

32,898

  |

(3)

  |  
 |

Net debt2◊

  |

8,997

  |

10,673

  |

(16)

  |  
 |

Ratios:

  |

 |

 |

 |  
 |

FFO to Net debt2,3◊

  |

133.2%

  |

108.3%

  |

 |  
 |

Net debt to Adjusted EBITDA3◊

  |

0.55x

  |

0.72x

  |

 |

**Another strong financial performance**
 – Adjusted EBITDA of $8.3 billion, up 
23%; Adjusted EBIT of $5.1 billion, up 35%

– Net income attributable to equity holders of $2.8 billion, up 13%; net income,
pre-significant items up 40% to $3.3 billion

– Funds from operations of $5.6 billion, up 8%

– Continued balance sheet strength and flexibility: Net debt of $9.0 billion, down
16%

– EPS of $0.19 per share, up 12%

– 2nd instalment of the 2018 distribution of $1.4 billion ($0.10 per share) payable
in September

**Strong Marketing performance**
 – Marketing Adjusted EBIT of $1.5 billion, up 
12%

– Strong performances from Metals and minerals and Energy products segments, up 
17% and 23% respectively

– Lower crop yields in key geographies reflected in weaker Agricultural products
performance; stronger H2 expected

Industrial assets performance underpinned by higher prices and continued cost/asset
optimisation
 – Industrial Adjusted EBITDA up 26% to $6.7 billion

– Solid first-half mine cost/margin performances across the business (Cu: 88c/lb,
Zn: -11c/lb (20c/lb ex Au), Ni: 177c/lb, Coal: $35/t margin at $50/t unit cash cost)

– Copper and zinc mine costs higher than initial FY guidance primarily due to project
ramp-up, lower by-product pricing, some modest energy cost inflation and H2 weighted
production

Growth through selective M&A
 – Hunter Valley Operations large-scale premium thermal
coal mine JV established in May (49% attributable to Glencore)

– Hail Creek primarily coking coal acquisition from Rio Tinto completed on 1 August

– Downstream oil investments in South Africa, Botswana and Brazil expected to complete
in H2

Increasing returns to shareholders, funded by cash generation
 – 2018E distributions/
buybacks now total $4.2 billion, comprising $2.85 billion distribution of 2017 cash
flows, $0.3 billion H1 share trust purchases and $1.0 billion H2 buy-back programme

– Confidence in own business prospects and current share trading levels point to
near-term focus on deleveraging and shareholder returns/buybacks

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