Glencore to pay out US$4b to investors after record profit

[LONDON] Glencore announced about US$4 billion in dividends and share buybacks after the company posted its highest-ever profit, and said it expects to resolve corruption probes this year that have been a long-running overhang on the stock.

Glencore posted core earnings of US$21.3 billion, about double its profit from a year earlier, while its trading unit also delivered record profits of US$3.7 billion. The company will pay US$3.4 billion in dividends and announced a new US$550 million share buyback.

Glencore said it was setting aside US$1.5 billion for probes by the US Department of Justice, the UK Serious Fraud Office and Brazilian authorities for possible money laundering and corruption, and expects to resolve the investigations this year.

Glencore, the world's biggest commodity trader, has positioned itself to be one of the biggest winners from what some analysts see as a new commodity supercycle. Its sprawling suite of mines produce many of the materials need for the energy transition and, as the world's biggest coal shipper, the company is also benefiting from the global energy crunch.

In recent years, Glencore has missed out on the bumper profits and massive dividends that its iron-ore mining rivals have made. Now, the strong surge in coal prices means it's positioned to join in on big shareholder returns.

The full-year results are the first under new chief executive officer Gary Nagle, who last year succeeded long-time boss Ivan Glasenberg. He's so far maintained his predecessor's strategy of simplifying the business and paying down debt, which has fallen to US$6 billion, well below the bottom end of its target range.

Glencore is the first of the major miners to report full-year earnings - BHP Group just reported bumper profits for its half-year - in what is expected to be a yet another strong earnings season for the sector.

The industry has been one of the biggest winners as the global economy rebounds from the pandemic, fuelled by trillions of dollars of government stimulus.

Those tailwinds have seen Glencore has climb to the highest price in almost a decade in recent weeks, jumping almost 50 per cent in the past year. BLOOMBERG