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LONDON (Reuters) – Glencore (OTC:GLNCY) will return $2.8 billion to shareholders in 2021 after soaring commodity prices helped the mining and trading company to a record performance for the first six months of the year, it said on Thursday.
The London-listed company’s first-half adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 79% to a record $8.7 billion, compared with $4.8 billion a year earlier, beating the $8.4 billion expected by analysts polled by Refinitiv.
Glencore joins rivals Rio Tinto (NYSE:RIO) and Anglo American (LON:AAL) in declaring bonanza payouts after record half-year profits powered by higher commodity prices.
“Following COVID-19’s severe global impacts in early 2020, the subsequent economic recovery has seen prices of most of our commodities surging to multi-year highs amid accelerating demand and lingering supply constraints,” said Glencore CEO Gary Nagle, who took the helm of the company in July.
Having reinstated its dividend in February after a pandemic-driven halt and a loss in the first half of 2020, Glencore announced an additional cash distribution of $0.04 cents per share, or $530 million to be paid in September, and a share buyback of $650 million.
The company in February recommended a total payout of $1.6 billion.
“Although this is less than our $2 billion expectation… we think the market will take this positively and the dividend itself is ahead of consensus,” said analysts at RBC Capital Markets.
Prices of metals, including copper, cobalt and nickel, have surged this year as demand rebounded from a COVID-19 slowdown. [MET/L]
(GRAPHIC: Miners outpace FTSE: https://fingfx.thomsonreuters.com/gfx/ce/zjpqkqgdlpx/miners%20outpace.JPG)
The higher prices allowed Glencore to cut debt to $10.6 billion from $15.8 billion at the end of 2020. This was within its target range of $10-$16 billion, which the miner said it would need to reach before increasing dividends.
Glencore’s trading or marketing division cashed in on volatility in the market and recorded a EBIT of $1.8 billion in the period. The division is expected to hit the top end of a previous guidance of $2.2-$3.2 billion per annum.
(GRAPHIC: Glencore H1: https://fingfx.thomsonreuters.com/gfx/ce/lbpgnrdywvq/glencore%20H1.JPG)
