Glencore plc (GLEN) Ordinary Shares USD0.01
HL comment (18 February 2020)
Glencore reported full year underlying operating profit down 55% to $4.2bn. The group attributed the decline to lower commodity prices, an uncertain global trade environment and production challenges.
A dividend of $0.20 per share has been proposed, to be paid in two equal instalments.
The shares were broadly flat following the announcement.
Full year results
Industrial revenue was down 3% to $42.7bn and underlying earnings before interest and tax (EBIT) was down 73% to $1.8bn. The decline was driven by lower commodity prices, in particular coal, ferrochrome and cobalt. The group was also impacted by production challenges in its African copper portfolio.
The declines came in both the Metals and Minerals and Energy Products segments, which saw underlying EBIT fall 75% and 60% respectively.
The Marketing business reported revenue down 4% to $194.2bn and underlying EBIT down 2% to $2.4bn. Within the division, underlying Metals and Minerals EBIT fell 37% to $1.1bn due to poor cobalt prices and inventory write downs. This was largely offset by a 78% jump in Energy Products EBIT to $1.3bn, mainly thanks to a good performance in oil. The group maintains its long term expectations Marketing EBIT of $2.2-$3.2bn.
The group generated $4.0bn of free cash, down from $6.9bn last year.
As of 31 December 2019, net debt stood at $17.6bn, up from $14.7bn last year. $1.3bn of the increase was the result of accounting changes. The group intends to lower its debt to 1x cash profits, or around $14bn - $15bn excluding marketing leases.
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