Glencore EBITDA dropped on 25.4% and EBITDA Margin decreased slightly on 1.5 pp from 6.4% to 4.9%
18 Feb 2020 • About Glencore (
$GLEN) • By InTwits
Glencore reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is relatively stable: 4.9% in FY2019 vs. 6.4% in FY2018 vs. 5.1% in FY2015
- Glencore has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 2.3%.
- CAPEX is quite volatile: £39m in FY2019, £28m in FY2018, £22m in FY2017, £28m in FY2016, £8m in FY2015
- The company has potentially unprofitable business model: ROIC is 3.9%
- It operates with high leverage: Net Debt/EBITDA is 3.4x while industry average is 1.8x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Glencore's Revenue decreased on 2.1%. During FY2015-FY2019 Revenue growth topped in FY2017 at 34.3% and was decelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 1.5 pp from 6.4% to 4.9% in FY2019.
Gross Margin decreased slightly on 1.9 pp from 4.1% to 2.2% in FY2019. During FY2015-FY2019 Gross Margin topped in FY2018 at 4.1%. SG&A as a % of Revenue showed almost no change in FY2019. During FY2015-FY2019 SG&A as a % of Revenue bottomed in FY2018 at 0.62%.
Net Income margin decreased slightly on 1.7 pp from 1.6% to -0.19% in FY2019. During FY2015-FY2019 Net Income margin topped in FY2017 at 2.8% and was declining since that time.
Investments (CAPEX, working capital and M&A)
In FY2019 the company had CAPEX/Revenue of 2.2%. CAPEX/Revenue showed almost no change from FY2016 to FY2019. It's average CAPEX/Revenue for the last three years was 2.0%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2017 at 1.7% and was growing since that time.
Return on investment
The company operates at low but positive ROIC (3.9%) and negative ROE (-0.9%). ROIC decreased on 4.8 pp from 8.7% to 3.9% in FY2019. ROE decreased on 8.1 pp from 7.1% to -0.94% in FY2019. During FY2015-FY2019 ROIC topped in FY2018 at 8.7%. During FY2015-FY2019 ROE topped in FY2017 at 12.3% and was declining since that time.
Leverage (Debt)
Debt level is 3.4x Net Debt / EBITDA and 3.5x Debt / EBITDA. Net Debt / EBITDA surged on 1.0x from 2.4x to 3.4x in FY2019. Debt increased on 5.9% while cash decreased on 7.2%. During the last 5 years Net Debt/EBITDA bottomed in FY2018 at 2.4x.
Glencore has short term refinancing risk: cash is only 23.8% of short term debt.
Management team
Glencore's CEO is Ivan Glasenberg. Ivan Glasenberg is a founder and has 5 years tenure with the company. Steven Kalmin "Steve" is a Glencore's CFO. Steven Kalmin "Steve" has spent 6 years at the company.
Financial and operational results
FY ended 30 Nov -0001
Glencore ($GLEN) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 147,351 | 152,948 | 205,476 | 219,754 | 215,111 | -2.1% |
| Gross Profit | 2,818 | 3,185 | 7,781 | 9,056 | 4,677 | -48.4% |
| SG&A | 1,073 | 1,082 | 1,291 | 1,362 | 1,391 | 2.1% |
| EBITDA | 7,557 | 7,715 | 11,869 | 14,000 | 10,446 | -25.4% |
| EBIT | | 2,083 | | | | |
| Tax | | 638 | | | | |
| Net Income | -4,964 | 1,379 | 5,777 | 3,408 | -404 | -111.9% |
Balance Sheet
|
|---|
| Cash | 2,707 | 2,508 | 2,124 | 2,046 | 1,899 | -7.2% |
| Inventory | | 18,347 | | | | |
| Short Term Debt | 11,117 | 10,030 | 9,402 | 8,570 | 7,976 | -6.9% |
| Long Term Debt | 32,932 | 23,188 | 24,532 | 26,424 | 29,067 | 10.0% |
Cash flow
|
|---|
| Capex | 5,372 | 3,048 | 3,586 | 4,687 | 4,712 | 0.5% |
Ratios
|
|---|
| Revenue growth | -33.3% | 3.8% | 34.3% | 6.9% | -2.1% | |
| EBITDA growth | -30.5% | 2.1% | 53.8% | 18.0% | -25.4% | |
|
|---|
| Gross Margin | 1.9% | 2.1% | 3.8% | 4.1% | 2.2% | -1.9% |
| EBITDA Margin | 5.1% | 5.0% | 5.8% | 6.4% | 4.9% | -1.5% |
| EBIT Margin | | 1.4% | | | |
| SG&A, % of revenue | 0.7% | 0.7% | 0.6% | 0.6% | 0.6% | 0.0% |
| Net Income Margin | -3.4% | 0.9% | 2.8% | 1.6% | -0.2% | -1.7% |
| CAPEX, % of revenue | 3.6% | 2.0% | 1.7% | 2.1% | 2.2% | 0.1% |
|
|---|
| ROIC | 1.7% | 2.4% | 7.6% | 8.7% | 3.9% | -4.8% |
| ROE | -11.1% | 3.2% | 12.3% | 7.1% | -0.9% | -8.1% |
| Net Debt/EBITDA | 5.5x | 4.0x | 2.7x | 2.4x | 3.4x | 1.0x |
Peers in Mining
Below you can find Glencore benchmarking vs. other companies in Mining industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Sylvania Platinum Ltd ($SLP) | 1.2% | -17.3% | 27.8% | 24.3% | |
| Goldplat ($GDP) | -20.9% | 21.4% | 56.8% | 6.8% | |
| Orosur Mining Inc ($OMI) | -18.0% | -34.9% | 3.2% | -16.1% | |
| |
|---|
| Median (3 companies) | -7.9% | 5.5% | 15.7% | 6.8% | -8.0% |
|---|
| Glencore ($GLEN) | | 3.8% | 34.3% | 6.9% | -2.1% |
Top companies by Gross margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Sylvania Platinum Ltd ($SLP) | 13.6% | 19.6% | 28.2% | 27.9% | |
| Goldplat ($GDP) | 5.8% | 14.9% | 16.4% | 15.0% | |
| Firestone Diamonds ($FDI) | | | | 8.2% | 18.0% |
| Orosur Mining Inc ($OMI) | -5.8% | 1.8% | 8.9% | -2.9% | |
| |
|---|
| Median (4 companies) | 20.9% | 28.9% | 24.9% | 11.6% | 41.1% |
|---|
| Glencore ($GLEN) | 1.9% | 2.1% | 3.8% | 4.1% | 2.2% |
Top companies by EBITDA margin, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Sylvania Platinum Ltd ($SLP) | 20.8% | 27.3% | 36.3% | 35.4% | |
| Goldplat ($GDP) | 0.1% | 9.3% | 12.0% | 10.6% | |
| Firestone Diamonds ($FDI) | | | | 9.4% | -54.0% |
| Orosur Mining Inc ($OMI) | -49.7% | -3.9% | 20.5% | -42.3% | |
| |
|---|
| Median (4 companies) | 18.3% | 26.0% | 28.5% | 10.0% | 6.3% |
|---|
| Glencore ($GLEN) | 5.1% | 5.0% | 5.8% | 6.4% | 4.9% |
Top companies by CAPEX/Revenue, %
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Orosur Mining Inc ($OMI) | 19.7% | 15.1% | 29.9% | 40.1% | |
| Sylvania Platinum Ltd ($SLP) | 6.9% | 3.7% | 8.3% | 12.6% | |
| Goldplat ($GDP) | 6.0% | 6.9% | 6.0% | 5.2% | |
| Firestone Diamonds ($FDI) | | | | 3.2% | 6.9% |
| |
|---|
| Median (4 companies) | 14.5% | 15.5% | 12.8% | 8.9% | 13.1% |
|---|
| Glencore ($GLEN) | 3.6% | 2.0% | 1.7% | 2.1% | 2.2% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Sylvania Platinum Ltd ($SLP) | 2.6% | 5.0% | 11.2% | 12.5% | |
| Goldplat ($GDP) | -2.8% | 5.8% | 12.9% | 10.6% | |
| Firestone Diamonds ($FDI) | -2.0% | -4.4% | -87.2% | -6.0% | -42.4% |
| Red Rock Resources ($RRR) | -13.0% | 7.9% | -2.8% | -12.6% | -23.0% |
| Regency Mines ($RGM) | | -40.5% | -9.5% | -49.8% | -50.0% |
| |
|---|
| Median (12 companies) | -0.8% | 5.2% | 7.0% | -9.3% | -42.4% |
|---|
| Glencore ($GLEN) | 1.7% | 2.4% | 7.6% | 8.7% | 3.9% |
Top companies by Net Debt / EBITDA
| Top | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Firestone Diamonds ($FDI) | | | | 13.3x | |
| Goldplat ($GDP) | -9.4x | -0.9x | -0.3x | -0.1x | |
| Sylvania Platinum Ltd ($SLP) | -0.7x | -0.5x | -0.8x | -0.6x | |
| |
|---|
| Median (3 companies) | 1.1x | 1.3x | 0.6x | -0.1x | 1.2x |
|---|
| Glencore ($GLEN) | 5.5x | 4.0x | 2.7x | 2.4x | 3.4x |
