Bern - Glencore opened the door for a big dividend this
year to reward shareholders, which includes its top executives and dozens of
employees, for sticking with the company through the commodities crisis.
The mining giant, along with Rio Tinto and BHP Billiton,
surprised investors this month by promising bigger shareholder payouts as
profits exceed analysts’ estimates. Glencore cut its debt in half last year and
reported a 48 percent jump in earnings on the back of higher metals prices.
"We could give our long-suffering shareholders a
generous gift," CEO Ivan Glasenberg said on a call
after the earnings results, adding there was potential to "kick out a big
dividend" in 2017.
Glasenberg is the company’s second-largest shareholder,
only behind the sovereign wealth fund of Qatar, with a stake of 8.4 percent.
Other senior executives, such as Daniel Mate, head of zinc, and Telis
Mistakidis, head of copper, are also big owners.
It’s a remarkable U-turn for the company, which runs one
of the largest commodities trading operations, after it had to suspend
dividends and sell shares in late 2015 to raise cash. With its business
turnaround complete, the company is looking to grow. Glasenberg said he had the
appetite for opportunistic acquisitions, adding to recent deals to increase
copper production in the Democratic Republic of Congo and oil trading in
Russia.
The shares added 2.1 percent to 332.50 pence as of 10:10
a.m. in London. The stock tripled in 2016 after four years of losses.
Impressive
“Glencore delivered an impressive 2016 earnings result,
beating on earnings, Ebitda and net debt, which is a standout against peers,
and likely to set the company up for a strong 2017," Heath Jansen, a
mining analyst at Citigroup Inc., said in a note to clients.
Read more: Drowning in debt to swimming in cash, miners
told to pay up
The company reported adjusted profit rose 48 percent last
year to $1.99 billion, exceeding the average analyst estimate of $1.59 billion.
Glencore’s trading unit, which deals in almost 100 raw materials, reported
the highest earnings since 2008 and performed “extremely well,” the CEO said on
a conference call after the results.
Glasenberg said the "time is right" to reward
shareholders after two difficult years. That’s on top of plans to pay almost $1
billion in 2017, with dividends of 3.5 cents a share due in May and September.
Read also: Glencore buys out billionaire
Glencore was successful in bringing down its debt levels
last year, a major concern for investors during the commodities crisis, through
asset sales and higher earnings. Net debt declined 40 percent in 2016 to $15.5
billion, below the company’s previous target.
Mergers and acquisitions “is the way this company grew
and will continue doing so. Not wildly, carefully. I don’t see a big M&A,
but we are opportunistic," Glasenberg said.
Other 2016 financial highlights include:
Adjusted Ebitda rose 18 percent to $10.3 billion Profit
outlook for trading increased to $2.2 billion to $2.5 billion for 2017 Industrial
division Ebit at $1.1 billion, compared with a $292 million loss in 2015
Trading division Ebit at $2.82 billion, up from $2.46 billion in 2015
Peter Grauer, the
chairman of Bloomberg LP, is a senior independent non-executive director at
Glencore.