Glencore PLC Delivers A Strong First Half

Glencore PLC (LON:GLEN) raises its interim dividend and plans a return of capital to shareholders.

The Motley Fool Staff

Published 20 August, 2014 9:43 am BST

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Glencore (LSE: GLEN) — the Anglo–Swiss multinational commodity trading and mining company — published its first-half report for 2014 this morning, which has nudged its share price up 0.5% in trading so far.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose 8% compared to pro forma H1 2013, up at $6.5bn. Describing its results as “strong”, Glenore said they were driven by growth in marketing, overall production expansion and synergies from the acquisitions of Xstrata and Viterra.”

The company said that there was “healthy cash flow generation”, with funds from operations (FFO) of $4.9bn, up 15% compared to pro forma H1 2013, and adjusted rolling 12 month FFO-to-net-debt improving to 33.8% from H1 2013’s 29%.

The board is recommending an interim dividend of 6 cents per share, which is a 11% increase over 2013’s interim, which it says relects its “confidence in the prospects and strength of our underlying commodities and business and cashflow profile.”

Having completed its sale of its Las Bambas mine for $6.5bn, and only spent $1.6bn on the acquisition of Caracal (formerly its majority partner in oil exploration and development operations in the Republic of Chad), net debt has been reduced by 9%, falling to $32.6bn. The company has said that it is now in a position to “accelerate the return of excess capital to shareholders” and that it intends to implement a share repurchase or buy-back programme of up to $1bn between now and 31 March 2015

Commenting on the results, CEO Ivan Glasenberg, remarked:

“Glencore continued to make decisive progress in delivering on the potential created by the Xstrata acquisition over the first half of 2014. We remain the most diversified natural resources company by activity, commodity and geography, providing us with a stable operating platform as well as a high degree of optionality to underlying prices and bolt-on or brownfield development opportunities. We look to the future with optimism based on our strong starting point and our culture of entrepreneurialism and hard work to leverage tightening commodity fundamentals.“

Glencore’s share price is up over 21% on this time last year, putting in the FTSE 100’s less than 5% rise in the shade. However, over the last five years Glencore has dropped almost 33%, compared to a near 14% rise in the FTSE 100.