We update our model following 4Q24 production and detailed disclosure around cost guidance and realised prices. The Viterra-Bunge transaction now looks unlikely, but still could happen, to close before 2H24 financial results on 19 February.
Resetting shareholder return expectations
As we reset our earnings estimates, detailed below, there is a clear knock-on impact to shareholder returns. We now forecast a YE24 base dividend of USD1.7bn (USD1bn from Marketing + 25% industrials FCF per their formula). We forecast a top up payment of approximately USD350m, after adjusting for the base dividend provision and lease liability. The total return amounts to USD0.17/sh (consensus USD0.16/sh). As the Viterra-Bunge transaction has received Canadian approval but not yet Chinese, we have delayed the USD1bn of cash proceeds to Glencore which was previously in our YE24 return assumption. If that transaction closes before 19 Feb, it would be included in the calculation and increase our top up forecast by an equivalent amount. For now, our base case is that it will be an ad hoc top up once the deal is closed.
Recent production report helps to lock down 2H24 estimates
Considering the amount of disclosure Glencore provides alongside its 4Q24 production report (production, realised prices, cash costs), we can fairly accurately lock down our EBITDA forecasts which are now USD14.5bn for FY24 (-3% vs consensus) and USD8.2bn for 2H24 (-5% vs consensus, Figure 1). Following 4Q24 production results, which we had yet to mark-to-market for Q4 actual metal prices, our 2024 EBITDA decreases by -13%. This is primarily on coal price realisations and portfolio mix adjustments. There are other moving parts, as detailed in Figure 2, but this is the most significant variable. We make modest adjustments to our 2025 and 2026 operational assumptions but these lead to a much more muted -2% and -1% impact on EBITDA. Considering the earnings downgrades, we decrease our TP to 480p (prev...
