Glencore Final Results
Industrial activities Adjusted EBIT up 18% compared to 2010, benefiting from generally stronger commodity prices and increased production.
• Marketing activities Adjusted EBIT, excluding agricultural products which was adversely impacted by the unprecedented volatility and disruption in the cotton market, was over 10% higher than 2010.
• Copper equivalent production volumes increased 16% in 2011 driven by a strong performance from the industrial activities including:
- Kazzinc: completion of the new copper smelter and increased gold production;
- Katanga: 57% production increase of copper metal contained as a result of the phase III expansion;
- Mutanda: current production has increased 47,000 MT to 64,000 MT. The growth is part of its 110,000 MT copper development project which is tracking ahead of schedule;
- Prodeco: 45% increase in production from 2010 attributable to the current expansion project; and
- Aseng field in Block I - Equatorial Guinea: first oil produced in Q4 2011.
• Significant increase in Kazzinc's mineral reserves at the Vasilkovskoye, Maleevsky and Ridder-Sokolny deposits with contained gold up 50%, contained copper up 136% and contained zinc up 67%.
• Strong and improving cashflow coverage ratios with FFO to Net debt increasing 20% from 22.6% to 27.2% and Net debt to Adjusted EBITDA falling to 2.00 times from 2.38 times.
• Prior to the announcement of the proposed merger with Xstrata, both S&P (via an upgrade) and Moody's (via stabilisation of outlook) improved their credit ratings on Glencore to BBB (stable) and Baa2 (stable) respectively. Following the merger announcement, both agencies have flagged possible upgrade potential.
• The Directors propose a final dividend of $ 0.10 per share, bringing the total dividend for the year to $ 0.15 per share.
Glencore's Chief Executive Officer, Ivan Glasenberg, commented:
"Glencore delivered a solid performance in 2011, despite challenging economic conditions and markets. In particular, the industrial business benefited from stronger average prices for the key commodities it produces as well as the planned increase in production at many operations including Prodeco, Katanga, Kazzinc and Mutanda. Thus far in 2012, market conditions have improved and the year has started well across all segments of our business. Emerging market urbanisation will continue to increase commodity intensity per capita as the demand for goods and products that industrialised societies take for granted increases. This demand dynamic alongside the strength of our organic growth prospects will continue to be a fundamental driver of our business in 2012."