Glencore’s Financial Alchemy and its cash-flows from the operations inadequacy.

“We reinstate the dividends. $1bn to be paid, with a new structure from 2018 paying $1bn base of marketing cash flows.”

Glencore Investor update call 2016

Summary of Glencore’s 1H-2016

  • The EBIT coverage of net interest is 1.12, in the lowest decile.
  • Depreciation accounts for 78% of Glencore EBITDA
  • Glencore’s Operating Cash-flows are at 10-quarter low.
  • Depreciation itself represents 89% of Glencore Operating Cash-Flows
  • The inadequacy of Glencore ocfs quality and quantity precludes any cash distribution.

 

glen3

 

 

 

  • Depreciation accounts for 78% of the EBITDA

glen1

 

 

glencore4

  • The EBIT coverage of net interest is 1.12, in the lowest decile.

glen2

  • Glencore’s Operating Cash-flows are at 10-quarter low.

 

glencore-ocf

 

Non-cash components represents 89% of Glencore Operating Cash-Flows

glencore132

 

  • The lack of the quality and the inadequate quantity of Operating Cash-flows precludes Glencore to distribute $1bn.

It predicates that to reinstate the dividend, the trader will:

i) sell more assets or

ii) ostensibly raise more debt-like obligations…

  • This will deteriorate the position of those who have invested in the credit risk of the company.

glencore-credit-vs-equity

“Neither Glencore nor any of its associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this document will actually occur”.

www.glencore.com/investors/

 

Simon Jacques is a certified Energy Risk Professional, as distinguished by the prestigious Global Association of Risk Professionals.

certifiederp

 

Simon Jacques

1-226-348-5610 advising the producer, processor and end-user in North America.

repo66

Commodity trading and finance

 

Navigating the commodities markets with Freight and Spreads © 2016

 

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