Equity Research

4 March 2014

Glencore Xstrata

FY13 results a clean beat with growth

on track, capex coming down and costs
being cut

EARNINGS REVIEW
European Mining

NEGATIVE
Unchanged
South Africa Mining

NEUTRAL

Glencore has released a decent set of results this morning, with:

Pro-forma EBITDA of $13.1bn, 5% ahead of our estimate and 7% ahead of

company-compiled consensus; EBIT of $7.4bn, likewise, 10% and 14% ahead
respectively; while net earnings were c.20% ahead at $4.58bn.

Marketing contributed 32% of EBIT and was slightly below expectations due to a
weaker performance from Energy. Industrial activity contributed 68% and was
19% ahead of expectations, with the main driver of the beat the better-thanexpected performance in copper from lower costs.

The dividend was lifted 5% to $0.165/sh for the full year. Net debt included
RMIs $35.8bn, 5% below our estimate. FFO was 13% ahead at $10.4bn.

Glencore remains one of our preferred stocks in the sector due to 71% EPS growth into
2015, an attractive commodity split with further diversified growth from Marketing, a
balance sheet probably less stretched than perhaps the market thinks ($13bn of
undrawn facilities and cash) and FCF on the rise. PER multiples for this year and next
are 16.8x and 9.8x, respectively, EV/EBITDA of 8.5x and 6.3x and a free cashflow yield
of 3.1% and 9%. P/NPV stands at 0.98x. We retain our OW.

EBITDA

David Butler
+44 (0)20 3134 5756
david.s.butler@barclays.com

Ian Rossouw
+44 (0)20 3555 2620
Barclays, London
Lourina Pretorius
+44 (0)20 3555 4423
lourina.pretorius@barclays.com
Barclays, London
Amos Fletcher
+44 (0)20 7773 2225

Glencore Xstrata FY13 results summary (pro-forma)

FY13e

European Mining

ian.rossouw@barclays.com

cash inflow from Russneft loan repayment though.

FY13A

For a full list of our ratings, price target and

earnings changes in this report, please see
table on page 2.

Barclays, London

Sustainable synergies from the Xstrata integration rose to $2.4bn, from $2bn.
No sale of Las Bambas as yet and a small $0.5bn increase in impairments. $1.2bn

$m

Unchanged

amos.fletcher@barclays.com

% diff

Cons

% diff

FY12A

12,266

% YoY

Barclays, London

13,071

12,454

5%

7%

13,086

0%

Marketing activities

2,356

2,476

-5%

nm

2,130

11%

Industrial activities

5,078

4,262

19%

nm

6,461

-21%

+27 11 895 6080

Total EBIT

7,434

6,739

10%

6,519

14%

8,591

-13%

caroline.learmonth@barclays.com

EBIT (post-JV adjustments)

6,998

6,337

10%

6,236

12%

8,029

-13%

Absa, Johannesburg

Underlying earnings

4,583

3,833

20%

3,797

21%

5,970

-23%

0.35

0.29

21%

0.29

21%

0.42

-17%

0.165

0.156

6%

0.15

10%

0.16

5%

EPS
DPS ($/sh)
FFO

10,375

9,180

13%

nm

10,267

1%

Net debt (incl RMI)

35,810

37,531

-5%

nm

29,460

22%

Net debt (excl RMI)

52,228

53,666

-3%

nm

46,750

12%

Source: Company data, Barclays Research, company compiled consensus; DPS Bloomberg consensus.

Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies
covered in its research reports. As a result, investors should be aware that the firm may have a
conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment decision.
This research report has been prepared in whole or in part by equity research analysts based outside
the US who are not registered/qualified as research analysts with FINRA.
PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 9.

South Africa Mining

Caroline Learmonth

Barclays | Glencore Xstrata

Summary of our Ratings, Price Targets and Earnings Changes in this Report (all changes are shown in bold)
Company

Rating
Old

New

European Mining

Neg

Neg

South Africa Mining

Neu

Neu

Price
03-Mar-14

Price Target
Old

New

%Chg

EPS FY1 (E)

Old

New

%Chg

EPS FY2 (E)

Old

New

%Chg

Source: Barclays Research. Share prices and target prices are shown in the primary listing currency and EPS estimates are shown in the reporting currency.
FY1(E): Current fiscal year estimates by Barclays Research. FY2(E): Next fiscal year estimates by Barclays Research.
Stock Rating: OW: Overweight; EW: Equal Weight; UW: Underweight; RS: Rating Suspended
Industry View: Pos: Positive; Neu: Neutral; Neg: Negative

4 March 2014

Barclays | Glencore Xstrata

Glencore closes out big 4 reporting season with good results

This was the final set of numbers from the big four diversified miners. Its been a good
season too with production overall beating, costs under control and capex coming down
quickly. Moreover, management are hinting at returns of capital if market conditions remain
reasonably supportive and lifting dividends in the interim. How things have changed, and no
wonder we have seen a re-rating of most of the stocks. The average big four multiple has
increased from 10.2x on 7 January using spot commodities and currencies to 13.3x as of
yesterday. EBITDA and EBIT numbers are given below:
FIGURE 1
EBITDA and EBIT summary of the Big 4
2012

2013

2014E

2012-13

2013-14

EBITDA
Glencore

13,086

13,071

14,152

0%

8%

BHP Billiton1

32,025

30,953

33,311

-3%

8%

Rio Tinto

19,125

21,509

21,376

12%

-1%

8,860

9,520

8,116

7%

-15%

Anglo American
EBIT
Glencore

8,591

7,434

7,870

-13%

6%

BHP Billiton1

25,084

23,118

24,756

-8%

7%

Rio Tinto

14,294

8,468

15,288

-41%

81%

6,253

6,620

5,409

6%

-18%

Anglo American

Source: Company, Barclays Research, Note: 1 Calendar year

Highlights
FIGURE 2
Glencore Xstrata FY13 results summary (pro-forma)
$m

FY13A

FY13e

% diff

Cons

% diff

FY12A

% YoY

EBITDA

13,071

12,454

5%

12,266

7%

13,086

0%

Operating profit
Marketing activities

2,356

2,476

-5%

nm

2,130

11%

Industrial activities

5,078

4,262

19%

nm

6,461

-21%

Total Operating Profits (EBIT)

7,434

6,739

10%

6,519

14%

8,591

-13%

EBIT (post-JV adjustments)

6,998

6,337

10%

6,236

12%

8,029

-13%

Underlying earnings

4,583

3,833

20%

3,797

21%

5,970

-23%

0.35

0.29

21%

0.29

21%

0.42

-17%

0.165

0.156

6%

0.15

10%

0.16

5%

EPS
DPS ($/sh)
Funds from operations (FFO)

10,375

9,180

13%

nm

10,267

1%

Net debt (incl RMI)

35,810

37,531

-5%

nm

29,460

22%

Net debt (excl RMI)

52,228

53,666

-3%

nm

46,750

12%

Source: Company data, Barclays Research

Note: company compiled consensus; DPS Bloomberg consensus.

P&L: Pro-forma EBITDA of $13.1bn was 5% ahead of our estimate and 7% ahead of
consensus. With D&A slightly lower than expectations ($5.6bn vs. $5.7bn), pro-forma
EBIT of $7.4bn came in 10% ahead of our estimate and 14% ahead of consensus.
Further down the P&L, lower than expected interest ($1,434m vs. $1,661m) was
partially offset by higher tax ($712m vs. $542m) and minorities ($269m vs. $254m), but

4 March 2014

Barclays | Glencore Xstrata

still left underlying earnings of $4.6bn, 20% ahead of our estimate and 21% ahead of
consensus. Sequentially, EBITDA rose 18% HoH and net earnings +24% HoH.

$9bn of impairments, of which $8.5bn already reported ($7.5bn from the Xstrata
assets): Aside from the $8.5bn of impairments already announced in H1-13, further
impairments for FY-13 include $137m for Cobar, a $122m incremental impairment for
UC Rusal ($324m impaired in H1-13), a $300m adjustment to various long-term loans &
advances, $308m of M2M adjustments for investments held for trading and $261m
related to unrealised profit eliminations. The Xstrata goodwill number was reduced from
$7.66bn to $7.48bn.

Marketing activities (32% of 2013 EBIT) strong performance: Marketing EBIT of

$2.4bn increased 11% YoY (-1% HoH) but came in 5% below our estimate, driven by a
lower than expected contribution from Energy ($629m vs, $1,027m est.), offset by a
better than expected performance in Metals & Minerals ($1,622m vs. $1,413m est.) and
Ags ($198m vs. $121m est.). The strong performance from Metals & Minerals (EBIT
+19% YoY, +28% HoH) reflected solid contributions from each of the metals marketing
groups, aided by overall volume growth and relatively tight physical demand conditions
in many markets (e.g. zinc and aluminium). Energy (EBIT +45% YoY, -75% HoH)
benefitted from coal in particular, which recovered from a base 2012 period which
offered limited arbitrage opportunities; no reasons are given for the weaker H2 vs. H1
performance. Ags was also weaker (-47% YoY, +1120% HoH), in line with the
performance reported at the interims, although H2-13 EBIT saw a substantial
improvement from a solid performance from the Viterra assets. The Marketing division
contributed 32% of the group pro-forma EBIT, down from 37% in H1-13.

Industrial activities (68% of 2013 EBIT): Industrial EBIT of $5.078bn fell 21% YoY,
(+54% HoH) primarily due to lower commodity prices. The EBIT figure came in 19%
ahead of our estimate, driven by the better-than-expected performance in Metals &
Minerals ($4,036m vs. $3,182m), partially offset by the lower than expected
performance from Energy ($1,244m vs. $1,357m est) and Ags ($-6m vs $-39m est).
Corporate expenses & other came in at $196m vs. our estimate of $237m. Within Metals
& Minerals, pro-forma EBIT from the key copper division (42% of 2013 EBIT) increased
8% YoY (+127% HoH), while zinc (8% of 2013 EBIT) fell 59% YoY (-57% HoH). The
main driver for the beat in Metals & Minerals was from copper, which came in 43%
above our estimate due to the better cost performance across most of the assets.
With Energy, EBIT from coal (13% of 2013 EBIT) fell 50% YoY (+13% HoH) and came in
5% below our expectations. The weak YoY performance in Ags was due to poor crush
margins, although we note H2-13 performance improved significantly (+183% HoH).

Cash flow & balance sheet: Pro-forma funds from operations (FFO) of $10.375bn
increased 1% YoY and compared to our estimate of $9.2bn. Better than expected FFO
was further assisted by a working capital release ($2.6bn vs. our est. of $2.55bn), lower
than expected cash taxes ($593m vs. $864m) and lower net interest paid ($1,498m vs.
$1,661m). This was partially offset by higher than expected capex pro-forma capex of
$12.8bn vs. $12.3bn est. ($12.1bn guidance) with the main variance coming from
copper (Las Bambas was $330m more than our estimate). This left net debt (excl.
Readily Marketable Inventories/ RMIs) at $52.2bn ($49.2bn at June 2013) vs. our
estimate of $53.7bn. Including RMIs, net debt amounted to $35.8bn ($34.8bn at June
2013). Pro-forma FFO/net debt using 80% of RMIs as cash was 21% (29% using 100%
of RMIs) and net debt/EBITDA of 3.74x (2.74x incl. 100% of RMIs). Glencore had
c.$13bn of committed available liquidity at the end of the period (vs. more than $13.6bn
as of June 2013).

4 March 2014

Barclays | Glencore Xstrata

Xstrata merger synergies: Sustainable synergies from the Xstrata integration rose to
$2.4bn, from $2bn. We expect the main increase came from further cost savings at the
operational level management should provide more details at the results presentation.

Las Bambas sale: No new news provided in the release, other than to say the process is
ongoing.

Dividend slightly better than expected, +4.8% YoY: The final dividend of $0.111/sh is
up 7.2% and takes the FY-13 declared dividend to $0.165/sh (+4.8% YoY). This is 6%
ahead of our estimate and c.10% ahead of company-compiled consensus.

Conference call / webcast: 9am UK time. Tel: +44 (0)20 3427 1916. Webcast can be
accessed via the Glencore website.
See full summary table of results on the next page.

4 March 2014

Barclays | Glencore Xstrata

FIGURE 3
Glencore Xstrata FY13 results (pro-forma)
$m
Group Revenue

FY13A

FY13e

% diff

239,673

253,338

Cons

% diff

FY12A

% YoY

-5%

nm

236,236

1%

Operating profit (EBIT)

Marketing activities
1,622

1,413

15%

nm

1,363

19%

Energy

Metals & Minerals

629

1,027

-39%

nm

435

45%

Agricultural

198

121

63%

nm

371

-47%

Corporate & Other

-93

-85

9%

nm

-39

138%

2,356

2,476

-5%

nm

2,130

11%

4,036

3,182

27%

nm

4,534

-11%

3,148

2,208

43%

nm

2,922

8%

601

752

-20%

nm

1,450

-59%

Nickel

73

136

-46%

nm

264

-72%

Aluminium/Alumina

10

-37

-127%

nm

-42

-124%

207

128

62%

nm

-48

-531%

-3

-5

-40%

nm

-12

-75%

Total Marketing EBIT

Industrial activities
Metals & Minerals
Copper
Zinc

Ferroalloys
Iron ore
Energy

1,244

1,357

-8%

nm

2,289

-46%

Coking Australia

181

145

25%

nm

301

-40%

Thermal Australia

229

207

10%

nm

906

-75%

Thermal South Africa

254

263

-4%

nm

409

-38%

Prodeco

175

222

-21%

nm

4275%

Cerrejon

109

164

-33%

nm

262

-58%

Other coal

nm

nm

nm

Total Coal

948

1,001

-5%

nm

1,882

-50%

Oil

296

356

-17%

nm

407

-27%

-6

-39

-85%

nm

-10

-40%

Agricultural
Corporate & Other

-196

-237

-17%

nm

-352

-44%

Total Industrial (EBIT)

5,078

4,262

19%

nm

6,461

-21%

Total Operating Profits (EBIT)

7,434

6,739

10%

6,519

14%

8,591

-13%

EBIT (post-JV adjustments)

6,998

6,337

10%

6,236

12%

8,029

-13%

13,071

12,454

5%

12,266

7%

13,086

0%

4,583

3,833

20%

3,797

21%

5,970

-23%

0.35

0.29

21%

0.29

21%

0.42

-17%

0.165

0.156

6%

0.15

10%

0.16

5%

EBITDA
Underlying earnings
Adj EPS
DPS ($/sh)
Funds from operations (FFO)

10,375

9,180

13%

nm

10,267

1%

Net debt (incl RMI)

35,810

37,531

-5%

nm

29,460

22%

Net debt (excl RMI)

52,228

53,666

-3%

nm

46,750

12%

Source: Company, Barclays Research Note: company compiled consensus. DPS is Bloomberg consensus.

4 March 2014

Barclays | Glencore Xstrata

European Mining

Industry View: NEGATIVE

Glencore Xstrata Plc. (GLEN.L)

Income statement ($mn)
Revenue
EBITDA
EBIT
Pre-tax income
Net income
EPS (adj) ($)
Diluted shares (mn)
DPS ($)

2012A
233,445
12,892
8,084
6,284
2,261
0.42
13,601.4
0.15

Margin and return data

EBITDA margin (%)
EBIT margin (%)
Pre-tax margin (%)
Net margin (%)
ROIC (%)
ROA (%)
ROE (%)

Stock Rating: OVERWEIGHT

2013E
253,338
12,454
6,739
4,629
-4,600
0.29
13,699.3
0.16

2014E
261,874
14,152
7,870
5,709
4,163
0.31
13,699.3
0.16

2015E
274,379
18,553
12,133
10,189
7,118
0.54
13,699.3
0.17

CAGR
5.5%
12.9%
14.5%
17.5%
46.6%
8.5%
0.2%
4.3%

5.5
3.5
2.7
1.0
6.6
3.5
9.5

4.9
2.7
1.8
-1.8
4.8
2.3
7.0

5.4
3.0
2.2
1.6
5.1
2.5
8.1

6.8
4.4
3.7
2.6
8.1
4.3
13.0

Average
5.7
3.4
2.6
0.8
6.1
3.2
9.4

Balance sheet and cash flow ($mn)

Tangible fixed assets
73,097
Intangible fixed assets
8,279
Cash and equivalents
4,511
Total assets
169,043
Short and long-term debt
52,473
Other long-term liabilities
15,649
Total liabilities
104,084
Net debt/(funds)
47,924
Shareholders' equity
59,586
Change in working capital
-757
Cash flow from operations
8,452
Capital expenditure
-12,769
Free cash flow
-4,400

70,610
9,344
2,896
161,359
56,590
17,448
106,811
53,666
50,419
2,553
11,633
-12,311
-872

66,056
9,344
11,211
165,670
58,758
17,448
109,129
47,519
52,413
-508
10,361
-7,657
2,293

65,379
9,344
11,542
167,295
54,758
17,448
105,914
43,188
57,253
-1,294
13,118
-5,698
6,559

CAGR
-3.7%
4.1%
36.8%
-0.3%
1.4%
3.7%
0.6%
-3.4%
-1.3%
N/A
15.8%
N/A
N/A

18.9
10.6
-1.2
0.3
1.4
2.9
4.3
52.3

17.4
8.9
3.1
0.3
1.4
3.0
3.4
56.5

10.2
6.6
8.8
0.3
1.3
3.1
2.3
52.4

Average
14.9
9.0
1.2
0.3
1.3
2.9
3.4
51.9

Valuation and leverage metrics

P/E (adj) (x)
EV/EBITDA (x)
FCF yield (%)
P/Sales (x)
P/BV (x)
Dividend yield (%)
Net debt/EBITDA (x)
Total debt/capital (%)
Selected operating metrics

13.0
9.9
-5.9
0.3
1.2
2.8
3.7
46.5

Price (03-Mar-2014)
GBp 326.3
Price Target
GBp 375.0
Why Overweight? GLEN trades on full valuations
which seems justifiable given the unique business
model, best-in-class growth and returns. Longer term
the rewards for patience are there to be seen with
best in sector FCF yields and undemanding PERs and
P/NPV.
Upside case
GBp 660.0
The upside case is driven by commodity prices.
Assuming 20% higher commodity prices.
Downside case
GBp 127.5
Conversely assuming 20% lower commodity prices.
Upside/Downside scenarios

POINT Quantitative Equity Scores

Value

Quality

Sentiment

Low

High

Source: POINT. The scores are valid as of the date of this

report and are independent of the fundamental analysts'
views. To view the latest scores, please go to the equity
company page on Barclays Live.

Source: Company data, Barclays Research

Note: FY End Dec

4 March 2014

Barclays | Glencore Xstrata

South Africa Mining

Industry View: NEUTRAL

Glencore Xstrata Plc. (GLNJ.J)

Income statement ($mn)
Revenue
EBITDA (adj)
EBIT (adj)
Pre-tax income (adj)
Net income (adj)
EPS (adj) ($)
Diluted shares (mn)
DPS ($)

Stock Rating: OVERWEIGHT

2012A
233,445
12,892
8,084
6,284
5,535
0.42
13,601.4
0.15

Margin and return data

EBITDA (adj) margin (%)
EBIT (adj) margin (%)
Pre-tax (adj) margin (%)
Net (adj) margin (%)
ROIC (%)
ROA (%)
ROE (%)

2013E
253,338
12,454
6,739
4,629
3,833
0.29
13,699.3
0.16

2014E
261,874
14,152
7,870
5,709
4,163
0.31
13,699.3
0.16

2015E
274,379
18,553
12,133
10,189
7,118
0.54
13,699.3
0.17

CAGR
5.5%
12.9%
14.5%
17.5%
8.7%
8.5%
0.2%
4.3%

5.5
3.5
2.7
2.4
6.6
3.5
9.5

4.9
2.7
1.8
1.5
4.8
2.3
7.0

5.4
3.0
2.2
1.6
5.1
2.5
8.1

6.8
4.4
3.7
2.6
8.1
4.3
13.0

Average
5.7
3.4
2.6
2.0
6.1
3.2
9.4

Balance sheet and cash flow ($mn)

Tangible fixed assets
73,097
Intangible fixed assets
8,279
Cash and equivalents
4,511
Total assets
169,043
Short and long-term debt
52,473
Other long-term liabilities
15,649
Total liabilities
104,084
Net debt/(funds)
47,924
Shareholders' equity
59,586
Change in working capital
-757
Cash flow from operations
8,452
Capital expenditure
-12,769
Free cash flow
-4,400

70,610
9,344
2,896
161,359
56,590
17,448
106,811
53,666
50,419
2,553
11,633
-12,311
-872

66,056
9,344
11,211
165,670
58,758
17,448
109,129
47,519
52,413
-508
10,361
-7,657
2,293

65,379
9,344
11,542
167,295
54,758
17,448
105,914
43,188
57,253
-1,294
13,118
-5,698
6,559

CAGR
-3.7%
4.1%
36.8%
-0.3%
1.4%
3.7%
0.6%
-3.4%
-1.3%
N/A
15.8%
N/A
N/A

18.8
4.8
-1.2
0.0
1.4
2.9
4.3
52.3

17.3
3.8
3.1
0.0
1.4
3.0
3.4
56.5

10.1
2.7
8.8
0.0
1.3
3.2
2.3
52.4

Average
14.8
3.9
1.2
0.0
1.3
3.0
3.4
51.9

Valuation and leverage metrics

P/E (adj) (x)
EV/EBITDA (adj) (x)
FCF yield (%)
P/Sales (x)
P/BV (x)
Dividend yield (%)
Net debt/EBITDA (adj) (x)
Total debt/capital (%)

12.9
4.3
-6.0
0.0
1.2
2.8
3.7
46.5

Price (03-Mar-2014)
ZAR 58.79
Price Target
ZAR 62.00
Why Overweight? GLEN trades on full valuations
which seems justifiable given the unique business
model, best-in-class growth and returns. Longer term
the rewards for patience are there to be seen with
best in sector FCF yields and undemanding PERs and
P/NPV.
Upside case
ZAR 109.00
The upside case is driven by commodity prices.
Assuming 20% higher commodity prices.
Downside case
ZAR 21.00
Conversely assuming 20% lower commodity prices.
Upside/Downside scenarios

Source: Company data, Barclays Research

Note: FY End Dec

4 March 2014

Barclays | Glencore Xstrata

ANALYST(S) CERTIFICATION(S):
We, David Butler, Ian Rossouw, Lourina Pretorius, Amos Fletcher and Caroline Learmonth, hereby certify (1) that the views expressed in this
research report accurately reflect our personal views about any or all of the subject securities or issuers referred to in this research report and (2)
no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research
report.
The POINT Quantitative Equity Scores (POINT Scores) referenced herein are produced by the firms POINT quantitative model and Barclays
hereby certifies that (1) the views expressed in this research report accurately reflect the firm's POINT Scores model and (2) no part of the firm's
compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.

IMPORTANT DISCLOSURES CONTINUED

Barclays Research is a part of the Corporate and Investment Banking division of Barclays Bank PLC and its affiliates (collectively and each
individually, "Barclays"). For current important disclosures regarding companies that are the subject of this research report, please send a written
request to: Barclays Research Compliance, 745 Seventh Avenue, 14th Floor, New York, NY 10019 or refer to http://publicresearch.barclays.com
or call 212-526-1072.
The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total
revenues, a portion of which is generated by investment banking activities.
Research analysts employed outside the US by affiliates of Barclays Capital Inc. are not registered/qualified as research analysts with FINRA.
These analysts may not be associated persons of the member firm and therefore may not be subject to NASD Rule 2711 and incorporated NYSE
Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analysts account.
Analysts regularly conduct site visits to view the material operations of covered companies, but Barclays policy prohibits them from accepting
payment or reimbursement by any covered company of their travel expenses for such visits.
In order to access Barclays Statement regarding Research Dissemination Policies and Procedures, please refer to
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The Corporate and Investment Banking division of Barclays produces a variety of research products including, but not limited to, fundamental
analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ
from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or
otherwise.
Primary Stocks (Ticker, Date, Price)
Glencore Xstrata (GLEN.L, 03-Mar-2014, GBp 326.3), Overweight/Negative, D/J/K/L/M/N
Glencore Xstrata (GLNJ.J, 03-Mar-2014, ZAR 58.79), Overweight/Neutral, D/J/K/L/M/N
Materially Mentioned Stocks (Ticker, Date, Price)
Anglo American (AGLJ.J, 03-Mar-2014, ZAR 267.50), Equal Weight/Neutral, A/B/C/D/E/J/K/L/M/N
Anglo American plc (AAL.L, 03-Mar-2014, GBp 1478.5), Equal Weight/Negative, A/B/C/D/E/J/K/L/M/N
BHP Billiton (BILJ.J, 03-Mar-2014, ZAR 338.21), Overweight/Neutral, C/D/E/J/K/L/M/N
BHP Billiton Ltd. (BHP.AX, 03-Mar-2014, AUD 37.40), Overweight/Neutral, A/C/D/E/J/K/L/M/N
BHP Billiton plc (BLT.L, 03-Mar-2014, GBp 1905.0), Overweight/Negative, C/D/E/J/K/L/M/N
Rio Tinto plc (RIO.L, 03-Mar-2014, GBp 3350.5), Equal Weight/Negative, C/D/J/K/L/M/N/O

Disclosure Legend:
A: Barclays Bank PLC and/or an affiliate has been lead manager or co-lead manager of a publicly disclosed offer of securities of the issuer in the
previous 12 months.
B: An employee of Barclays Bank PLC and/or an affiliate is a director of this issuer.
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within the next 3 months.
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to the research report's issuance.
G: One of the analysts on the coverage team (or a member of his or her household) owns shares of the common stock of this issuer.
H: This issuer beneficially owns 5% or more of any class of common equity securities of Barclays Bank PLC.
I: Barclays Bank PLC and/or an affiliate has a significant financial interest in the securities of this issuer.
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K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from this issuer within the past 12 months.
4 March 2014

Barclays | Glencore Xstrata

IMPORTANT DISCLOSURES CONTINUED

L: This issuer is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.
M: This issuer is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC
and/or an affiliate.
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and/or an affiliate.
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R: Barclays Capital Canada Inc. and/or an affiliate has received compensation for investment banking services from this issuer in the past 12
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S: Barclays Capital Canada Inc. is a market-maker in an equity or equity related security issued by this issuer.

Guide to the Barclays Fundamental Equity Research Rating System:

Our coverage analysts use a relative rating system in which they rate stocks as Overweight, Equal Weight or Underweight (see definitions below)
relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry (the "industry coverage
universe").
In addition to the stock rating, we provide industry views which rate the outlook for the industry coverage universe as Positive, Neutral or
Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors
should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone.
Stock Rating
Overweight - The stock is expected to outperform the unweighted expected total return of the industry coverage universe over a 12-month
investment horizon.
Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the industry coverage universe over a 12month investment horizon.
Underweight - The stock is expected to underperform the unweighted expected total return of the industry coverage universe over a 12-month
investment horizon.
Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or to
comply with applicable regulations and/or firm policies in certain circumstances including where the Corporate and Investment Banking Division
of Barclays is acting in an advisory capacity in a merger or strategic transaction involving the company.
Industry View
Positive - industry coverage universe fundamentals/valuations are improving.
Neutral - industry coverage universe fundamentals/valuations are steady, neither improving nor deteriorating.
Negative - industry coverage universe fundamentals/valuations are deteriorating.
Below is the list of companies that constitute the "industry coverage universe":
Asia ex-Japan Metals & Mining
ACC Limited (ACC.NS)

Adaro Energy Tbk PT. (ADRO.JK)

Aluminum Corporation of China Ltd. (2600.HK)

Ambuja Cements (ABUJ.NS)

Angang Steel Co., Ltd. (0347.HK)

Anhui Conch Cement Co., Ltd. (0914.HK)

Banpu PCL (BANPU.BK)

BHP Billiton Ltd. (BHP.AX)

Bumi Resources Tbk PT. (BUMI.JK)

China Coal Energy Co., Ltd. (1898.HK)

China Hongqiao Group Ltd. (1378.HK)

China National Building Material Co., Ltd.

(3323.HK)

China Resources Cement Holdings Ltd.

(1313.HK)

China Shanshui Cement Group Ltd.

(0691.HK)

China Shenhua Energy Co., Ltd. (1088.HK)

China Steel Corp. (2002.TW)

Coal India (COAL.NS)

CST Mining Group Ltd. (0985.HK)

Fortescue Metals Group Ltd. (FMG.AX)

Harum Energy Tbk PT. (HRUM.JK)

Hindalco Industries Ltd. (HALC.NS)

Hindustan Zinc Ltd. (HZNC.NS)

Hyundai Steel Co. (004020.KS)

Indo Tambangraya Megah Tbk PT. (ITMG.JK)

IRC Ltd. (1029.HK)

Jiangxi Copper Co., Ltd. (0358.HK)

Jindal Steel & Power (JNSP.NS)

JSW Steel (JSTL.NS)

Korea Zinc Co., Ltd. (010130.KS)

Maanshan Iron & Steel Co., Ltd. (0323.HK)

MMG Limited. (1208.HK)

National Aluminium Co., Ltd. (NALU.NS)

NMDC Ltd. (NMDC.NS)

POSCO (005490.KS)

Sesa Sterlite Ltd (SESA.NS)

Shree Cement (SHCM.NS)

Steel Authority of India (SAIL.NS)

Tata Steel (TISC.NS)

TB Bukit Asam Tbk PT. (PTBA.JK)

4 March 2014

10

Barclays | Glencore Xstrata

IMPORTANT DISCLOSURES CONTINUED

UC Rusal (0486.HK)

Yanzhou Coal Mining Co., Ltd. (1171.HK)

European Mining
African Barrick Gold (ABGL.L)

African Minerals Ltd. (AMIq.L)

Anglo American plc (AAL.L)

Antofagasta (ANTO.L)

ArcelorMittal (ISPA.AS)

Asia Resource Minerals Plc (ARMS.L)

BHP Billiton plc (BLT.L)

Ferrexpo Plc (FXPO.L)

First Quantum Minerals (FQM.L)

Fresnillo (FRES.L)

Glencore Xstrata (GLEN.L)

Hochschild Mining (HOCM.L)

Kazakhmys (KAZ.L)

London Mining Plc (LOND.L)

Polymetal International (POLYP.L)

Polyus Gold (PGIL.L)

Randgold Resources (RRS.L)

Rio Tinto plc (RIO.L)

Vale (VALE)

Vedanta Resources plc (VED.L)

South Africa Mining

African Rainbow Minerals Ltd. (ARIJ.J)

Anglo American (AGLJ.J)

ArcelorMittal South Africa Ltd. (ACLJ.J)

BHP Billiton (BILJ.J)

Exxaro Resources Ltd. (EXXJ.J)

Glencore Xstrata (GLNJ.J)

Kumba Iron Ore Ltd. (KIOJ.J)

Distribution of Ratings:
Barclays Equity Research has 2585 companies under coverage.
44% have been assigned an Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 46% of
companies with this rating are investment banking clients of the Firm.
38% have been assigned an Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 43% of
companies with this rating are investment banking clients of the Firm.
15% have been assigned an Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 40% of
companies with this rating are investment banking clients of the Firm.
Guide to the Barclays Research Price Target:
Each analyst has a single price target on the stocks that they cover. The price target represents that analyst's expectation of where the stock will
trade in the next 12 months. Upside/downside scenarios, where provided, represent potential upside/potential downside to each analyst's price
target over the same 12-month period.
Guide to the POINT Quantitative Equity Scores:
The POINT Quantitative Equity Scores (POINT Scores) are based on consensus historical data and are independent of the Barclays fundamental
analysts views. Each score is composed of a number of standard industry metrics.
A high/low Value score indicates attractive/unattractive valuation. Measures of value include P/E, EV/EBITDA and Free Cash Flow.
A high/low Quality score indicates financial statement strength/weakness. Measures of quality include ROIC and corporate default probability.
A high/low Sentiment score indicates bullish/bearish market sentiment. Measures of sentiment include price momentum and earnings revisions.
These scores are valid as of the date of this report. To view the latest scores, which are updated monthly, click here.
For a more detailed description of the underlying methodology for each score, please click here.
Barclays offices involved in the production of equity research:
London
Barclays Bank PLC (Barclays, London)
New York
Barclays Capital Inc. (BCI, New York)
Tokyo
Barclays Securities Japan Limited (BSJL, Tokyo)
So Paulo
Banco Barclays S.A. (BBSA, So Paulo)
Hong Kong
Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong)
Toronto
Barclays Capital Canada Inc. (BCCI, Toronto)
Johannesburg
Absa Bank Limited (Absa, Johannesburg)
Mexico City
4 March 2014

11

Barclays | Glencore Xstrata

IMPORTANT DISCLOSURES CONTINUED

Barclays Bank Mexico, S.A. (BBMX, Mexico City)
Taiwan
Barclays Capital Securities Taiwan Limited (BCSTW, Taiwan)
Seoul
Barclays Capital Securities Limited (BCSL, Seoul)
Mumbai
Barclays Securities (India) Private Limited (BSIPL, Mumbai)
Singapore
Barclays Bank PLC, Singapore branch (Barclays Bank, Singapore)

4 March 2014

12

Barclays | Glencore Xstrata

IMPORTANT DISCLOSURES CONTINUED

Glencore Xstrata (GLEN LN / GLEN.L)

Stock Rating

GBP 3.26 (03-Mar-2014)

OVERWEIGHT

Rating and Price Target Chart - GBP (as of 03-Mar-2014)

Currency=GBP
Date

5.50
5.25
5.00

Industry View
NEGATIVE

Closing Price

Rating

10-Jan-2014

3.19

Overweight

Adjusted Price Target

3.75

11-Jul-2013

2.66

Equal Weight

3.05

Source: Thomson Reuters, Barclays Research

4.75

Historical stock prices and price targets may have been adjusted for
stock splits and dividends.

4.50
4.25
4.00
3.75
3.50
3.25
3.00
2.75
2.50
Jul- 2011

Jan- 2012

Jul- 2012

Closing Price

Jan- 2013

Target Price

Jul- 2013

Jan- 2014

Rating Change

Source: IDC, Barclays Research

Link to Barclays Live for interactive charting

D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Glencore Xstrata in the past 12 months.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Glencore Xstrata.
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Glencore Xstrata within the past 12
months.
L: Glencore Xstrata is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.
M: Glencore Xstrata is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC
and/or an affiliate.
N: Glencore Xstrata is, or during the past 12 months has been, a non-investment banking client (non-securities related services) of Barclays Bank
PLC and/or an affiliate.
Valuation Methodology: Our NPV-based target price for GLEN shares is based on 1.1x NPV.
Risks which May Impede the Achievement of the Barclays Research Price Target: Risks include commodity price demand and pricing, operating
and capital cost inflation, project delivery, exchange rate movements, political risk in countries GLEN operates and M&A risk.

4 March 2014

13

Barclays | Glencore Xstrata

IMPORTANT DISCLOSURES CONTINUED

Glencore Xstrata (GLN SJ / GLNJ.J)

Stock Rating

ZAR 58.79 (03-Mar-2014)

OVERWEIGHT

Rating and Price Target Chart - ZAR (as of 03-Mar-2014)

Currency=ZAR
Date

Industry View
NEUTRAL

Closing Price

Rating

55.87

Overweight

10-Jan-2014

64

Adjusted Price Target

62.00

Source: Thomson Reuters, Barclays Research

Historical stock prices and price targets may have been adjusted for
stock splits and dividends.

62

60

58

56

54

52

50

48
01- Dec- 2013

01- Jan- 2014

Closing Price

01- Feb- 2014

Target Price

01- Mar- 2014

Rating Change

Source: IDC, Barclays Research

Link to Barclays Live for interactive charting

D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from Glencore Xstrata in the past 12 months.
J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Glencore Xstrata.
K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Glencore Xstrata within the past 12
months.
L: Glencore Xstrata is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.
M: Glencore Xstrata is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC
and/or an affiliate.
N: Glencore Xstrata is, or during the past 12 months has been, a non-investment banking client (non-securities related services) of Barclays Bank
PLC and/or an affiliate.
Valuation Methodology: Our NPV-based target price for GLEN shares is based on 1.1x NPV.
Risks which May Impede the Achievement of the Barclays Research Price Target: Risks include commodity price demand and pricing, operating
and capital cost inflation, project delivery, exchange rate movements, political risk in countries GLEN operates and M&A risk.

4 March 2014

14

DISCLAIMER:
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