Glencore Hits 52-Week High as Company Restarts Dividend Payment

Summary

  • Shares of Glencore Plc surged a little more than 4 per cent on Tuesday after the company declared to restart dividend.
  • Barring today’s gain, the stock of Glencore has already advanced over 14 per cent in the present month so far.
  • The company realised a net profit of $697 million in the second half bouncing back from the coronavirus-led plunge as commodity prices reversed the drop.

 

Shares of Glencore Plc (LON: GLEN), the Baar-headquartered commodity trading firm, surged a little more than 4 per cent on Tuesday, 16 February, after the company released the preliminary financial results for FY20. The stock of Glencore gained in quick succession in the opening trades after the company announced to restart dividend payments. The company board had temporarily halted the dividends in 2020 following the Covid-induced uncertainty.

 

Shares fly high

 

Subsequent to the development, the stock of Glencore rose as much as 4.11 per cent to a 52-week high of GBX 293.90 from the previous closing price of GBX 282.30 apiece. According to the latest data available with the London Stock Exchange, the stocks have already advanced over 14 per cent in the present month so far. With today’s share price spurt, Glencore has topped the 101-constituent pack of FTSE 100.

(Source: Refinitiv, Thomson Reuters)

 

Dividend

 

The board of directors have agreed to propose a dividend after the company’s net debt reduced to $15.2 billion at the end of the reporting period, within the pre-defined target of $10-16 billion. Glencore’s board has recommended a cash dividend of $0.12 per share for the financial year 2020, translating into a total distribution of $1.6 billion.

 

The dividend of $0.12 will be payable in two equal installments in 2021. A payment of $0.06 will be distributed per share in May, and a $0.06 per share will be extended in September this year. According to Glencore, the distribution of cash dividend will be affected as a reduction of capital contribution reserves and would be exempted from Swiss withholding tax.

 

Glencore Plc has CHF 27 billion of capital contribution reserves in the statutory accounts at the end of October-December quarter. The distribution of dividend is subject to shareholders’ approval at the annual general meeting of Glencore scheduled to be held on 29 April.

 

Financials

 

Glencore’s net loss attributable to shareholders swelled to $1,903 million in FY20, largely due to pandemic-led stress in the business and its affiliates. The company parked $5,715 million for impairment of non-current assets in the last financial year, 146 per cent higher than the cost of $2,322 million recognised in FY20.

 

With the sharp increase in the net losses, the earnings per share reduced to a negative $0.14 per share at the end of 31 December 2020, from a negative $0.03 per share. The fiscal results of the company in 2020 reflects a year of two halves, Glencore said in a statement.

 

The financial results in the H12020 were heavily impacted by the lower commodity prices and early repercussions of the pandemic following which the company booked various impairment charges across the portfolio.

 

On the contrary, the company realised a net profit of $697 million in the second half, bouncing back from the Covid-led plunge as commodity prices reversed the drop with economies begins to recover. The average price of London Metal Exchange traded copper in H2 FY20 was 24 per cent higher as compared to the average prices in H1 FY20. The agreed sale of Mopani is likely to be finalised in Q2 2021.

 

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