TOP NEWS: Glencore Annual Loss Widens Sharply On Impairment Charges

(Alliance News) - Glencore PLC on Tuesday posted a widened loss for 2020, as revenue plunged, but ...

Alliance News 16 February, 2021 | 8:23AM
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(Alliance News) - Glencore PLC on Tuesday posted a widened loss for 2020, as revenue plunged, but the Swiss commodities trader and miner still recommended a distribution to shareholders, due to a reduction in net debt.

Glencore also set out its climate goals, including a managed decline in coal production.

For 2020, Glencore reported adjusted earnings before interest, tax, depreciation and amortisation of USD11.56 billion, down 0.3% from USD11.60 billion the year before due to weaker coal prices.

The result beat the company-compiled analyst consensus for adjusted Ebitda of USD10.69 billion.

Adjusted earnings before interest and tax, however, rose 6% year-on-year to USD4.42 billion from USD4.15 billion, and above consensus expectations of USD4.13 billion.

Glencore's pretax loss widened sharply to USD5.12 billion from USD888 million the prior year, driven by impairment charges which more than doubled to USD5.72 billion from USD2.32 billion.

The impairments included Glencore's oil operations in Chad and the Astron oil refinery due to lower price assumptions due to the economic effect of Covid-19.

There are also impairments at Prodeco coal operations as a result of continued pressure on the European coal market, Glencore said, and at the Mopani copper operations due to ongoing operational challenges, delays in key development projects, and cost increases.

Annual revenue declined 34% to USD142.34 billion in 2020 from USD215.11 billion in 2019.

Glencore had already reported its production figures for 2020, with copper output down 8% year-on-year at 1.26 million tonnes, cobalt 41% lower to 27,400 tonnes, nickel down 9% to 110,200 tonnes, and coal down 24% at 106.2 million tonnes.

However, zinc production rose by 9% to 1.17 million tonnes, gold up 2% too 916,000 ounces and silver output up 2% to 32.77 million tonnes.

Glencore will not pay any dividend for 2020 as it looks to support its overall financial position, however due to net debt as at December 31 falling by 10% to USD15.84 billion from USD17.56 billion, the group has recommended a 2021 base distribution of 12 US cents per share.

"The Covid-19 pandemic is an extraordinary challenge that continues to impact many aspects of day-to-day life. Against this backdrop, the strength of our 2020 underlying performance is a credit to our highly skilled and dedicated employees, and also reflects our unique business model and ability to quickly adapt to changing market conditions and customer needs," said Chief Executive Officer Ivan Glasenberg.

Referring to the dividend proposal, Glasenberg said: "Strong second half cash flows repositioned net debt of USD15.8 billion within our target range, allowing for the resumption of distributions."

Glasenberg added: "As the world focuses on the pathway to recovery from Covid-19, it is clear that meeting the goals of the Paris Agreement has taken on even greater urgency. While innovation and technological advances have transformed how we live and work, the commodities needed to enable this have not. Our commodities are essential in developing all facets of infrastructure needed to deliver the goals of energy and mobility transition."

Glencore is a major coal producer. It promised on Tuesday "responsible stewardship of declining coal business over time as industry decarbonises". The miner also set a net zero carbon emissions ambition for 2050. It said it will put its climate strategy to an advisory vote at its annual general meeting in April.

"We remain focussed on creating sustainable long-term value for all stakeholders while operating in a responsible manner across all aspects of our business," Glasenberg said.

Shares in Glencore were up 1.9% at 287.55 pence on Tuesday in London, while its Johannesburg shares were 4.2% higher at ZAR58.82.

By Dayo Laniyan; dayolaniyan@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Glencore PLC 369.90 GBX -0.54

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