An extra $1.2 billion is to be returned to Glencore’s shareholders after soaring commodities prices helped it to achieve record underlying profits in the first half.
The FTSE 100 group said yesterday that it would pay a $530 million special dividend and would buy back $650 million of shares, in addition to its previously announced $1.6 billion dividend for this year.
The miner and commodities trader reported net profit of $1.3 billion, bouncing back from a $2.6 billion loss in the same period of 2020, when it suffered heavy impairment charges.
It said that adjusted earnings before interest, tax and other charges had hit a record high of almost $8.7 billion, up 79 per cent on a year earlier. Just over $2 billion of this stemmed from another strong performance from its trading division, which was only marginally down on last year, when it enjoyed a bumper performance after capitalising on wild swings in oil prices. Mining earnings increased by 150 per cent to $6.6 billion as prices rose.
Gary Nagle, Glencore’s new chief executive, said: “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.”
Advertisement
Glencore, listed in London but based in Switzerland, is one of the world’s biggest minerals traders. It also mines commodities including coal, copper, zinc and nickel.
The company is subject to five separate bribery and corruption investigations by authorities in the United States, Britain, Brazil and Switzerland. Last month Anthony Stimler, a former employee, pleaded guilty in America to breaching the US Foreign Corrupt Practices Act for his role in what prosecutors described as a scheme to bribe officials in Nigeria in return for favourable contracts.
In its half-year results, Glencore took a $216 million hit in legal-related costs, up from $56 million a year earlier. It said that it had provided for “one specific narrow aspect of these investigations”, but declined to give further details, adding that it was not possible to predict or estimate any potential liabilities beyond that, nor to give any indication when the investigations may conclude. It said that the conduct described in Stimler’s plea deal was “unacceptable” and that it had co-operated with the US justice department and had taken remedial measures.
Nagle, 48, said that “every person mentioned in that plea bargain has either been disciplined or has left the business ... That kind of behaviour is not condoned.”
Asked whether profit or the environment was more important to him as chief executive, Nagle responded: “The environment.”
Advertisement
Emphasising the importance of environmental, social and governance issues, he said: “ESG leads to a profitable business. There’s no question in my mind, as a responsible operator looking after the ESG elements, we will provide the profit — but it’s not going to be the tail that wags the dog.”
As mining stocks more widely struggled on the stock market yesterday, Glencore shares fell by 5¼p, or 1.6 per cent, to 324p.
