Glencore increases its 2014 full year dividend by 9% in $ terms

DividendMax Ltd.

Glencore increases its 2014 full year dividend by 9% in $ terms

Adjusted EBITDA of $12.8 billion in 2014 was modestly down on 2013 (2%), notwithstanding the weaker commodity price environment, reflecting:

-    Marketing Adjusted EBITDA up 15% to $3.0 billion (Adjusted EBIT up 18% to $2.8 billion), including significant earnings growth within Agriculture, on the back of strong results from Viterra.

-    Industrial Adjusted EBITDA lower by 7% to $9.8 billion, due to generally lower prices, largely offset by the positive impacts of production growth, real unit cost savings and weaker producer currencies.

•       Production growth consisted of:

-    Copper up 4% to 1.5 million tonnes, principally due to the ramp-up of Mutanda, up 31% to 197,000 tonnes, with the operation running at close to capacity throughout the year.

-    Higher zinc from Mount Isa, McArthur River and Perkoa as their expansion projects ramp-up, keeping overall zinc in line with 2013 at 1.4 million tonnes, despite lost production from the planned closures of the Perseverance and Brunswick mines in 2013.

-    Coal up 6% to 146.3 million tonnes, relating to productivity improvements and delivery of various advanced stage Australian thermal coal projects. A 3 week shutdown at our Australian coal operations was carried out over December 2014 and January 2015 in response to the subdued market environment.

-    Glencore oil entitlement was 7.4 million barrels, 47% higher than 2013. The increase relates to full year production from the Alen and Badila fields and increased ownership of the Chad assets following the Caracal acquisition. Mangara started production at the end of December 2014 and is expected to ramp-up during 2015.

•       FFO was broadly in line with 2013 at $10.2 billion, reflecting the resilient operating performance noted above.

•       Net debt decreased by $5.3 billion to $30.5 billion, reflecting robust operating cashflow, proceeds from the sale of Las Bambas, a 25% reduction in net capital expenditure and active working capital management.

•       Overall balance sheet remains strong and flexible with $9.4 billion of committed available liquidity at year-end.

•       Progressive capital management:

-    Our announced $1 billion share buyback programme returned to shareholders some $760 million by 31 December 2014; $930 million as of today.

-    Board has recommended a final cash distribution of $12 cents per share ($18 cents for the full year), 9% higher than 2013, reflecting our continued confidence in the strength and prospects of the Group.

•       Ongoing portfolio management reflects:

-    Completion of the sale of Las Bambas noted above.

-    Consolidation of our interests in Chad through the acquisition of Caracal.

-    Proposed in specie distribution of our non-core 23.9% stake in Lonmin.

-    Responding to the volatile market backdrop, we comprehensively reviewed the appropriate level of capex for 2015. Originally guided to $7.9 billion, we now expect 2015 total industrial capex to be in the $6.5-$6.8 billion range, with reduced spend across the broad portfolio.


Glencore's Chief Executive Officer, Ivan Glasenberg, commented:

"Our ultimate goal remains to grow our free cash flow and return excess capital in the most sustainable and efficient manner. As the most diversified raw material producer and marketer, Glencore is well positioned to react to and benefit from changes in commodity fundamentals. Glencore will continue to focus on maximising the value of the potential within our businesses. We look forward to the future with confidence."

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