Eadwig
18 Feb 2020
2019 Results Better than expected, but down due to the cobalt-related impairment and reduced demand and falling commodity prices. Divi remains the sme as I think everyone expected. The start to 2020 has seen more reduced demand and falling commodity prices due to the coronavirus (except gold) sohas to be kept a close eye on. - as always with GLEN. Possibly the predicted demand for cobalt will finally come through that caused the impairment last year, the tie-up with Tesla should take care of that if it all works out. The good thing about GLEN is they will cut production if demand (prices) fall too much, unlike others who will actually ramp up production to cover revenue shortfalls and thus end up working on wafer thin margins. The results highlights mention their cutting of carbon emissions and notes that the fall will be steeper still as their coal and oil reserves deplete over the years. No mention of what they’re going to replace that coal revenue with (they could dump oil production now and no one would notice, in fact GLEN is a NET USER of oil). If they’re relying on cobalt, well, it let them down once already and there are no guarantess that the E.V. revolution GLEN is positioned for will really come off, or when. $5bn capex this year, that’s higher than I was expecting. I’ll be interested to see what that breaks down as when I get time to look at the results in detail.
Eadwig
06 Dec 2019
SFO Investigation SFO record fine is £0.5Bn (RR) and GLEN was @235p on the RNS announcement, I reckon it had £2.6Bn wiped off market cap and we have no idea how big or small a problem it might be. I added @213p this morning, seems a safe bet to me. It could be a drag on the share price for years though.
Ripley94
14 Nov 2019
Request for Counsel GLEN… XXXX They were 353 then …338 by April 2019… by August 224… now 239p The slice was good in hindsight . Democratic Republic of Congo… Red Rock Resources.
Eadwig
05 Sep 2019
Copper Weakness Really didn’t need this strange dip going into the GLEN ex-div date. I let some of my holding go far too cheap, afraid that Cu might drop below the support level around $2.50/lb. I could have happily held and taken the divi instead. Meanwhile the buyback continues and recent comments appear to show management preferring future use of cash for buybacks perhaps over dividends.
Eadwig
31 Aug 2019
Nickel
Eadwig
12 Jun 2019
T/A says SELL.. Eadwig: The good news is that Cu is back up towards $3/lb … bubbling just under anyway. That didn’t last. The following looks set to keep some downward pressure on GLEN for a while… Norway fund may have to offload Glencore, Anglo American stakes Norway’s $1T sovereign wealth fund may have to sell its $1B stake in commodities giant Glencore under a center-right government plan expected to be adopted today by Norway’s parliament. The fund would also have to sell its 2.16% holding in miner Anglo American, worth $620M. The proposed tighter ethical investing rules would prohibit investments in companies that derive more than 30% of their revenue from coal, mine more than 20M tons of coal annually or generate more than 10 GW of power with coal.
Eadwig
04 Apr 2019
Glencore Results 2018 Eadwig: Cobalt demand has been disappointing given the electric vehicle revolution, especially in 2018H2 and GLEN have actually been stockpiling it (it is a by-product from their Congo copper mines). GLEN expect that prices will rise in 2019 but Cobalt sales may not really get going until 2020. Whether or not Cobalt will replace or overtake Nickel as a major revenue stream or remain one of the many minor metals such as gold, silver, platinum and various ferro-alloys remains to be seen. image.png783x610 42.9 KB Some ‘unofficial’ mines in Congo have already closed due to the price drop. GLEN rumoured to be cutting back on Cobalt production at Congo Mine(s). Some expert Cobalt followers are calling the bottom in the price here. Really not big deal for GLEN. Even a Cobalt price double or triple doesn’t really move the needle for them, although it does offset Cu costs from their Congo mines which have risen - but then so has the Cu price, around multi month highs: image.png581x661 59.2 KB
Eadwig
20 Mar 2019
T/A says SELL.. rhino666: Still holding GLEN - what a turnaround and, as it turns out, a good hedge being out of anto. Trouble is that GLEN now has a very large leaning towards copper. See my post on the 2018 results if you’re still holding. The good news is that Cu is back up towards $3/lb … bubbling just under anyway.
FundamentalTom
28 Feb 2019
Glencore Results 2018 I agree analysts give GLEN a hard time, for me they are an excellent value pick, they have fantastic cash flow and a relatively better than average balance sheet. Regardless of the buy or sell tips from analysts they have all factored in extremely punchy future earnings expectations, given it’s a good value pick I wouldn’t say it is completely priced in, meaning there is always room to grow. Plus being liquid is always a nice comfort when I go to sleep at night!
Eadwig
28 Feb 2019
Glencore Results 2018 Main things to take away from GLEN’s 2018 Results: First and foremost is that they have made steady progress as they re-position the company to some extent after their near-death experience resulting in a placement @125p a few years ago. Profits look fairly good (after exceptional items) despite a rough year for commodities, although global demand growth for copper was 2% as it has been more or less for the last few years. Copper stock drawdowns globally have been high so there is much less Copper on hand than in recent years which should see the price rise in 2019 if demand remains stable. Demand growth was seen in all other major GLEN mined metals. Nickel (+8%) is still classed as a major area for GLEN even though it accounts for less than 1% of their earnings now. The diversification between commodity trader and commodity producer is gradually lessening, which reduces a main reason for owning GLEN compared to other miners. Trading or ‘Marketing’ now accounts for around 20% of profits with mining, ‘Industrials’, making up 80%. Marketing is the main back-up for GLEN in a commodity downturn that other miners don’t have and was once almost 50% of their earnings. (It is hard to grow that part of the business when you already trade as much of the world’s commodities as GLEN does, to be fair). GLEN have always had remarkably low Copper production costs, but they are set to rise and may go over $1.00/lb for the first time. This is due to more copper being produced in Congo and that country having introduced new regulations and, I think higher royalties. This is particularly significant because copper is now GLEN’s biggest revenue earner. [By too much, in my mind, because, again, it reduces diversification] Coal was GLEN’s second biggest revenue stream in 2018 but GLEN have capped their production at 2018 levels to help their green credentials and anticipating less demand. Their silly little oil business in West Africa remains a tiny affair and their mining operations burn through more diesel than the whole thing produces. Dividend remains the same at $0.20 per share (see my comments in post below). The buyback continues with another $2Bn added plus $1Bn more expected during the year as ‘bits and pieces’ of asset sales are made as the re-positioning mentioned above is completed. By the end of 2019 all the additional shares (10%) that were added in the placement will have been bought back, I believe. Cobalt demand has been disappointing given the electric vehicle revolution, especially in 2018H2 and GLEN have actually been stockpiling it (it is a by-product from their Congo copper mines). GLEN expect that prices will rise in 2019 but Cobalt sales may not really get going until 2020. Whether or not Cobalt will replace or overtake Nickel as a major revenue stream or remain one of the many minor metals such as gold, silver, platinum and various ferro-alloys remains to be seen. There was talk of Aluminium having a disappointing year - I thought they had rid themselves of all aluminium production, to be honest, and in my experience with miners unless Aluminium interests are associated with some pretty precise engineering also, it isn’t worth being involved with. Debt levels have risen and are approaching the upper end of the ratio previously laid out as a safe level maximum. Given this was the area that screwed them up previously and they lost their AAA rating and are still classed as BBB/bbb (so costs more to maintain the debt) I would prefer to see it go no higher. Eadwig’s conclusions: I hold GLEN as a long term part of diversification in my Portfolio where it makes up between 4%-8% of the total. It varies a lot because I find it easy to trade real shares in GLEN with no stamp duty and it being part of a volatile sector. It pays reasonable dividends apart from when they became overloaded with debt and had to do the placement etc. It also earns US dollars from all its commodity sales and dealings which adds to the diversification of my portfolio. In fact GLEN are boasting of paying back $5.2Bn to shareholders this year (2019) but $3Bn of that is a buyback and $1Bn of that buyback will be from asset sales that can’t be repeated. Personally I’d rather see the dividend raised and/or some debt paid down, but GLEN have always run a high level of debt and it is very much a part of their business model … despite the volatile and cyclical nature of the business they are in. I’m currently holding @275p which gives me a yield of 5.6% at current Fx rates, which is only OK for one of a handful of dividend earners that are supposed to give my portfolio a solid base during the slower parts of the global business cycle. I was disappointed not to see the dividend rise, but will continue to trade GLEN (a tranche of which I bought @69p not so very long ago) to keep my holding price down and/or simply take profits from the trade. Having seen the difficulties GLEN did get themselves into through holding too much debt, I always like to include the fact that I wont be completely happy with my holding until the price average is closer to @200p. When GLEN were in trouble and they did their placement @125p I believe between 50 and 250 financial institutions wanted a part of it despite the company being close to broke on paper. Ivan Glasberg is obviously respected in the world of finance. So, overall, I’m not ecstatic with the results from a strategic point of view where my portfolio is concerned as the company is leaning far too much towards Copper and losing some of its diversification. Having said that, I still think GLEN is the best major miner to hold (if you choose to have such in your portfolio) and the fact three directors own 15% of the shares always gives me some confidence, but only some. They are risk-takers and often too opportunistic, in my view, when some asset comes up for sale that they see as a bargain they often snap it up for the odd $1Bn or so when there is often no obvious way it fits with the rest of the business (E.g. South African and Botswaanan refinery and garage brand a year or two ago). This opportunism, surrounding the mining plus the commodity trading is a strange and unique mix making for a company whose strategy is making money, pretty much, rather than some bold mission statement or other. They have been listed over 10 years now and I still think many analysts don’t really get them, which makes for some odd reviews and price targets on occasion. That just adds to the volatility bringing more trading opportunities, which I do think is key to holding GLEN, with a fairly solid dividend to back up any trade you find yourself having to hold.
Ripley94
15 Nov 2018
Request for Counsel GLEN… XXXX Gary Newman posted its cheap on 14th Nov 2018.
Ripley94
25 Sep 2018
Request for Counsel GLEN… XXXX Sliced that top of 18 days ago @ 338.5 ( Set limit ( D ) 338 went strait through ) Looks best price to 9.30 am .
Ripley94
07 Sep 2018
Request for Counsel GLEN… XXXXX Topped up @ 295 ( D )
Ripley94
06 Jul 2018
Request for Counsel GLEN … XXXXX Read in Wall St Journal they are investigating an Israeli diamond merchant .
Ripley94
03 Jul 2018
Request for Counsel GLEN… XXXX Big fall today down 10% due to subpoena from US justice. Might be corruption .
