Glencore scopes out return to profit

The trading division maintained its cash profits, but this was not enough to keep the overall adjusted figure from falling 26 per cent, to $11.6bn (£8.9bn). The dividend has been held at 20ȼ a share, although the share buyback programme is on hold until net debt comes down from $17bn to $14bn-$15bn, excluding lease liabilities relating to the trading division. 

In the results presentation, Mr Glasenberg outlined the forecast 30 per cent drop in 'scope 3 emissions' by 2035 – a measure of emissions of a product once it’s been sold on that is being increasingly adopted across the resources industry. However, this arbitrary date sits right after the company believes coal mines in Colombia and South Africa will run out of reserves. 

A low European coal price has already hit the company. Because of the LNG-switching-triggered lull in prices, Glencore wrote down almost $1bn from its Colombian coal holdings. This coupled with African copper and Chad oil write-downs took the company to a net loss of $400m, with total 2019 write-downs hitting $2.8bn. 

The key African copper division was poorer across the board, with production down from the Mutanda shutdown, Katanga uranium issues, and a triennial maintenance shutdown at the Mopani smelter alongside other work at the mine to address safety issues.

This division was the drag on adjusted cash profit margins on the metals and minerals side of the business – all-included, the margin fell from 38 per cent in 2018 to 28 per cent last year, and without African Copper and the adjacent Koniambo nickel operation, the cash profit margin fell from 41 per cent to 37 per cent. 

The trade halt brought on by coronavirus has slowed industrial improvement, although Glencore said it was too early still to know how the virus would affect commodity prices for the rest of 2020. 

Consensus estimates compiled by Bloomberg see 2020 cash profits at $11.9bn before climbing to over $13bn in 2021.