Glencore Interim Results 2012 21 August 2012
Ivan Glasenberg Chief Executive Officer I 2
H1 2012 Highlights Financial results supported by strong marketing performance Adjusted EBIT $2.5bn, 24% down H1 2012 vs. H1 2011, but up 20% sequentially – Annualised H1 2012 closely tracking FY 2011 result – Marketing EBIT $1.12bn, down 11% on H1 2011. Energy results were below the relatively strong prior year period, offsetting the stronger performances in metals and agriculture – Industrial EBIT down 32% to $1.4bn on H1 2011 due to materially lower average metals prices. Sequentially flat EBIT (including associates), but for consolidated operations up some 30% due to strong volume growth, particularly oil Strong cash flow generation, with funds from operations of $1.9bn, and an Adjusted EBITDA interest cover in excess of 7.0x Abundant liquidity with $9.0bn of committed headroom and no material refinancings in the next 12 months Sector leading growth pipeline remains overall on time and on budget Interim dividend of 5.4 cents per share, an 8% increase over H1 2011 – Reflects confidence in our commodity diversification, the robustness of Marketing, visibility on our brownfield assets ramp-up and the Group’s strong balance sheet 3 I
H1 Financial Performance – Marketing Activities Solid underlying profitability in marketing against a challenging Adjusted EBIT H1 2012 vs. H1 2011 and H2 2011 economic backdrop (US$ m) 1,400 Metals and Minerals 1,251 Strong performance driven by increased volumes and robust (10.9%) 92 1,115 1,200 premia for physical delivery of key metals 114 Improved profitability, 9% year-on-year and 13% sequentially 68.9% 1,000 Energy 552 350 Fewer arbitrage opportunities in energy compared to H1 2011 660 800 6 as a result of reduced volatility in oil and coal markets and 145 weaker freight environment 600 Strongly improved profitability vs. H2 2011 Agricultural Products 400 688 633 609 Grain and oilseed volumes maintained growth trend in H1 2012, with oilseed volumes, in particular, up substantially 200 versus H1 2011 Improved market fundamentals in key commodities since May 0 (26) (37) (100) Profitability improved 24% year-on-year and reversion to profit sequentially, with cotton issues now firmly behind us. (200) H1 2011 H2 2011 H1 2012 Metals and Minerals Energy Agriculture Corporate 4 I
H1 Financial Performance – Industrial Activities Core growth projects continue to deliver and remain on track Adjusted EBIT H1 2012 vs. H1 2011 and H2 2011 and within budget (US$ m) 2,600 Metals and Minerals 2,052 (32.1%) EBIT reduction compared to 2011 primarily driven by the 1,900 (2.9%) 908 1,435 negative impact of sovereign and macroeconomic concerns 1,393 1,200 on metal prices 886 660 211 Production performance ahead of schedule at Mutanda, offset 345 500 164 950 by some ramp-up delays at Katanga and Kazzinc 407 399 0 (17) (22) (11) (200) Flat sequential performance H1 2011 H2 2011 H1 2012 Adjusted EBITDA H1 2012 vs. H1 2011 and H2 2011 Energy (US$ m) Substantially improved performance with EBIT up 64% on 3,000 2,571 2011 driven by first full half year of production from the Aseng 2,500 (20.6%) oil field and to a lesser extent, strong coal volume growth 2,041 908 1,939 5.3% 2,000 Agricultural Products 660 13 886 1,500 305 21 Results affected by sugar cane harvest delays 528 10 1,000 266 1,345 500 832 777 0 H1 2011 H2 2011 H1 2012 Metals and Minerals Energy Agriculture Corporate (Including Xstrata) 5 I
H1 Operating Performance – Industrial Activities Primarily due to lower metal prices, Adjusted EBITDA for the period was $832m, down 38% compared to H1 Metals & 2011, but up 7% from H2 2011 Minerals Growth strategy to establish high quality, large scale, long life and low cost assets remains on track with significant future planned growth in own source copper volumes and gold Production from own sources Zinc: down 12% to 258kt Copper: flat at 170kt Gold: down 4% to 365ktoz (1) Substantially improved performance during H1 2012 on the back of the oil E&P operations with 11.0m bbls Energy produced from Aseng during the period Products Adjusted EBITDA for H1 2012 was $528m, up 73% compared to $305m in H1 2011 Prodeco production up 12% to 7.9mt but lower realised coal prices impacted profitability Additional contribution from South African coal following the Optimum, Umcebo and Shanduka Coal transactions Total production and processing up 9% to 3.0mt Agricultural Products Significant headway with Viterra approvals; only MOFCOM outstanding Commenced operations at two softseed crushing plants at Usti, Czech Republic and Bodaczow, Poland which were acquired in late 2011 Results impacted by Brazilian sugar crop harvest delays Notes: (1) Includes gold equivalents (silver) at a gold/silver conversion ratio of 1/53.16 and 1/41.09 for H1 2012 and H1 2011 respectively based on average prices. 6 I
Organic Growth – Glencore’s Own Production Cu Equivalent Production Volume and Capex (100% basis) US$ m k MT 1,600 5,000 Approved Expansion Projects: 2012E – 2015E CAGR 18.4% 4,000 1,200 3,000 800 2,000 400 1,000 0 0 2012E 2013E 2014E 2015E Mopani E&P Prodeco Kazzinc Katanga Mutanda Capex Capex for named assets 7 I Note: Excludes growth pipeline in agricultural segment, including Viterra
Key Growth Assets – Continued Progressive Ramp-Up Gold and silver production from own sources in H1 2012 were higher Kazzinc than H1 2011 by 13% and 15% respectively Reflects the ramp up at Altyntau Kokshetau and an increase in gold recovered from the lead smelter Own production (ktoz) 233 12.5% 207 – Operational review process (nearing completion) to de-bottleneck and increase production by H2 2013 Zinc, lead and copper production from own sources in H1 2012 were lower than in H1 2011 H1 2011 H1 2012 New copper smelter remains in ramp-up phase and now operating at Gold 80% of design capacity – Expected to reach design capacity in H1 2013 Copper produced in metal and concentrate in H1 2012 was 43kt, with Katanga Own production (kt) copper metal production increasing by 12% during the H1 2012 43 43 nil Ore mined and milled increased by 8% and 13% respectively Copper production flat primarily due to power outages resulting in equivalent 28 days of lost production Phase IV now in process with completion expected on time in 2013. H1 2011 H1 2012 Replicates proven technology already in use at Mutanda Copper 8 I
Key Growth Assets – Continued Progressive Ramp-up Completion of additional SX/EW circuits in Q2 2012 resulted in significant Mutanda copper cathode ramp up in H1 2012 – Copper cathode production 153% higher than H1 2011 at 36kt Own production (kt) 38 Copper production (metal and in concentrate) up 48% 48.4% 26 Feasibility study underway for 100kt sulphide concentrator, expected to be completed during Q1 2013 During H1 2012, increased interest in Mutanda from 40% to 60% with an option to purchase an additional 20% interest in December 2013 H1 2011 H1 2012 – Significant step in stated strategy of merging Mutanda and Kansuki Copper Mutanda / Kansuki on track to produce 200kt per annum by end 2013 First production from the Aseng field achieved in November 2011 E&P – Gross oil production achieved to the end of H1 2012 was 11.0m bbls, an average daily rate of 61,000 bbls/day Development of the Alen field in Equatorial Guinea remains on schedule for first production in Q3 2013 Glencore's first operated exploration well, Oak-1x, successfully drilled in the Bolongo licence (Glencore interest: 100%) offshore Cameroon during May and June. A 13.7 meter oil column was discovered in the main prospect with a total net oil pay of 6.2 meters, which has significantly de-risked the adjacent structures lying at similar depths Drilling of further wells planned in the Bolongo licence during 2013 to appraise the Oak discovery and to test the adjacent structures Preliminary estimates of hydrocarbon volumes from the Oak-1x indicate between 16 and 27 million barrels of recoverable oil and potentially between 38 and 90 million barrels of recoverable oil if the adjacent but untested structures are included Total own coal production H1 2012 was 7.9mt, up 12% compared to H1 2011 Own production (kt) Prodeco 7,944 % 0 7,093 2 . 1 – Positive result despite heavy rains leading to mud accumulation at the La Jagua pit Largest capital expenditure project currently under way is the construction of the new direct loading port (Puerto Nuevo) – Project on schedule and budget and expected to be commissioned in H1 H1 2011 H1 2012 2013 Coal 9 I
Steven Kalmin Chief Financial Officer 10 I
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