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Glencore says no dividend for 2020 meanwhile trading business is boosted by “exceptional market conditions”

“Notwithstanding our cash-generative business and secure liquidity positions, the board has concluded that it would be inappropriate to make a distribution to shareholders in 2020," Ivan Glasenberg said.

Glencore PLC -

Glencore PLC (LON:GLEN) results revealed its commodities trading business intends to make hay whilst the sun shines, at the cost of shareholder payments.

The miner and trader said it won’t be paying dividends during 2020 though at the same time its trading unit achieved record earnings (EBIT) of US$2bn that drive performance up into the top end of full-year guidance, which is pitched at US$2.2bn to US$3.2bn.

Oil trading in particular performed with Glencore highlighting the “exceptional market conditions” for crude whilst noting consistently good contributions across the business.

Chief executive Ivan Glasenberg noted that Glencore had for the most part continued operating relatively normally during the pandemic. He added that unit costs are broadly stable and capex was described as under control.

Nonetheless, some US$3.2bn of impairments were added in the interim results as some assets were pegged for extended care and maintenance as the company sought to preserve some resources for a better market environment.

“The outlook remains uncertain in the short term,” Glasenberg said in a statement.

“Notwithstanding our cash-generative business and secure liquidity positions, the board has concluded that it would be inappropriate to make a distribution to shareholders in 2020, instead prioritising the acceleration of net debt reduction to within our target range (<US$16 billion), currently expected to occur by the end of 2020.”

“Over the longer term, our diversified commodity portfolio, positions us well to play a key role in the next upward economic cycle, benefiting in particular from the commodities required for the transition to a low-carbon economy.”

Glencore reported a group net loss of US$2.6bn for the six months ended June 30, whilst adjusted earnings (EBITDA) amounted to US$4.8bn. It generated some US$3.68bn of funds from operations, and cash generation before working capital amounted to US$4.3bn.

The firm had net debt of US$19.69bn and some US$111.9bn of assets.

In London, Glencore shares dropped 3.8% to change hands at 188.24p.

Quick facts: Glencore PLC

Price: 165.06 GBX

LSE:GLEN
Market: LSE
Market Cap: £21.99 billion
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