News Column

Glencore digs up $1 billion for share buyback

August 21, 2014

By Rob Davies, Daily Mail, London



Aug. 21--Commodities giant Glencore promised investors more windfalls after announcing a $1bn (pounds sterling 600m) share buyback alongside an increase in half-year profits.

Underlying earnings beat expectations, increasing 8pc to pounds sterling 3.9bn in the first six months, with the fastest growth coming from Glencore's marketing division.

Trading in metals and other commodities delivered a 23pc rise in profit to pounds sterling 960m, with the group citing improved market conditions in grain, copper, zinc and nickel.

Its mining operations racked up a 3pc increase to pounds sterling 2.9bn, with weak commodity prices offsetting higher volumes in copper.

Shareholders will be treated to a share buyback of up to pounds sterling 600m by March next year, while this year's interim dividend is up 11pc to $0.06 US cents per share. The stock closed up 1.55p at 360.5p.

'This is not the last,' said chief executive Ivan Glasenberg. 'Even if commodity prices are weaker, we know this is still a cash-generating machine and we can still go ahead with share buybacks.'

He said the fact that directors own large stakes in the company – Glasenberg's 8.3pc is worth pounds sterling 3.9bn alone – would help ensure cash is prioritised over ambitious spending projects. This year's investor windfalls have been partly funded by the pounds sterling 3.9bn sale of the Las Bambas copper project in Peru, a condition imposed by Chinese regulators on the mega-merger with Xstrata.

'The successful divestment of Las Bambas has improved our balance sheet to a position that now allows us to accelerate the return of excess capital to shareholders,' said Glasenberg.

Analysts at Barclays said investors have now taken pounds sterling 4.8bn from the company, more than it raised when it floated in 2011, despite being burdened with costly projects started by Xstrata.

Glasenberg was optimistic about the outlook for commodity prices, saying the problem of oversupply in several commodities is easing.

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Source: Daily Mail (London, England)


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