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Glencore gets its swagger back as profits jump

Last updated: 11:52 23 Feb 2017 GMT, First published: 08:52 23 Feb 2017 GMT

picture of coal heap
Coal was one of the commodities to see a major recovery n 2016
Ivan Glasenberg, Glencore PLC’s (LON:GLEN) chief executive, said the mining and trading giant’s situation had never been better as underlying profits jumped by 81% and it resumed dividend payments.
 
Shareholders will get a 7c payout following a jump in net income to US$2bn (US$1.3bn) and underlying profits to US$3.9bn as base metal and coal prices recovered strongly over the year.
 
“Since our IPO in 2011 and subsequent acquisition and integration of Xstrata, Glencore has never been so well positioned as it is today”, said Glasenberg.
 
It is a far cry from the end of 2015 when Glencore’s share price had collapsed and there was talk it might not survive the commodity price slump.
 
The crisis prompted a dramatic debt reduction programme, which has seen borrowings reduce from US$30bn to US$15.5bn and a raft of business go.
 
The company has also reined back its new projects and said there would be no greenfield spending this year in the US$4bn budget, though there was scope for ‘highly selective’ growth opportunities.
 
In its pomp in 2014, Glencore made an approach to rival mining giant Rio Tinto, which was rebuffed and since when Glasenberg has been focused on ensuring Glencore’s survival.
 
As well as cost cutting and higher commodity prices, the contribution from the marketing division rose by 14% to US$2.8bn, up 14%, supported by improved demand conditions.
 
Net income attributable to equity holders was US$1.38bn  2016, compared to a $5bn loss.
 
Shares rose 5.5% to 343.8p.
 
--update for share price--
 

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