Glencore reinstates dividend as 2020 net debt drops, trading earnings jump

The logo of commodities trader Glencore is pictured in front of the company’s headquarters in Baar, Switzerland, July 18, 2017. REUTERS/Arnd Wiegmann/File Photo

JOHANNESBURG (Reuters) – Glencore on Tuesday reinstated its dividend after net debt fell by 10% last year, helped by surging commodity prices in the second half.

The commodities trader and miner, which scrapped its dividend in August after a first-half loss amid the COVID-19 pandemic, said it is recommending a distribution of $0.12 per share, or a total payout of $1.6 billion. That compares to $2.6 billion announced last year before the payout was cancelled.

Glencore’s trading business benefited from strong metals marketing and also the storing of oil when prices plunged earlier in 2020, selling it later at higher prices and profiting from what is known as a contango market structure.

“Navigating from recessionary conditions in the first half to a strong price recovery for most commodities in the second, adjusted EBITDA finished the year flat at $11.6 billion,” Chief Executive Ivan Glasenberg said.

The full-year adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) were above the $10.7 billion expected in a poll of 12 analysts compiled by Vuma, while marketing earnings before interest and taxes (EBIT) jumped 41% year-on-year, to $3.3 billion.

Net debt fell to $15.8 billion in 2020 from $17.6 billion in 2019, helped by strong second-half cash flows, the company said.

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