JOHANNESBURG (miningweekly.com) – The 2019 performance of diversified mining and marketing company Glencore reflected the prolonged and uncertain trade deal negotiations, generally weaker prices for key commodities and some operational challenges experienced at the ramp-up and development of assets, CEO Ivan Glasenberg said on Tuesday.
Adjusted earnings declined 26% to $11.6-billion, with UBS analysts commenting that the results turned out slightly better than expected. “Importantly, guidance is unchanged with unit costs slightly lower,” UBS said.
Even though earnings were down, they still beat consensus of $11.25-billion, said Credit Suisse analysts in a note.
A flat 20 c a share dividend totalling $2.6-million has been proposed by management.
In a release to Mining Weekly, Glasenberg said: “Our marketing business finished 2019 on a strong note, generating adjusted earnings before interest and tax of $2.4-billion, in line with 2018, with an excellent performance from oil and a stronger second half metals’ contribution, helping to offset the cobalt headwinds experienced in the first half. In relation to our ramp-up/development assets, performance is steadily improving, in particular at our flagship Katanga operation, which met its second half production targets for both copper and cobalt”
The London- and Johannesburg-listed company has again recommended to shareholders a 2020 base distribution of $0.20 a share, payable in two equal instalments, which is comfortably covered (c.1.5x) by current annualised business free cashflow generation, even applying the presently weakened coronavirus discounted commodity prices.
“We are also pleased to report progress against our commitments to the transition to a low-carbon economy. We are on track to achieve a near doubling of our first greenhouse gas target with a reduction in scope 1 and 2 emissions,” he said.
Looking ahead, in the short term, it is watching coronavirus developments closely and potential scenario impacts on global growth and markets.
As shown over many cycles, its business had, he said, various defensive cashflow characteristics, stemming primarily from marketing activities, but also material exposure to precious metals and infrastructure and expected countercyclical working capital inflows.
Its priorities for 2020 remained being focused on delivering sustainable long-term returns for all stakeholders, including via delivering a step-change in safety performance, realising the potential of its ramp-up assets, seizing further operational efficiencies, strengthening its balance sheet and managing the transition to Glencore’s next generation of leadership.