Glencore PLC’s (LON:GLEN) upbeat trading statement yesterday has prompted UBS to reiterate a ‘buy’ stance on the mining and metal trading titan.
Ivan Glasenberg, chief executive, announced that it was close to completing its debt reduction programme and would now resume dividends with a US$1bn payout.
From debts of US$30bn a little over a year ago, Glasenberg said it would finish this year with net debt of between US$16.5bn–US$17.5bn.
UBS said it was a reassuring statement and still reckons the valuation is compelling even though the shares are up 200% this year.
Glencore “offers leverage to commodities which have the most attractive fundamentals (Copper, Zinc, Nickel), and it will deliver material volume growth from latent capacity.”
Free cash flow of US$6.5bn underpins the dividend promise, while production, cost & capex guidance was in line with estimates. Zinc production will not restart until the market needs the volume.