The group delivered adjusted EBIT (earnings before interest, tax) of $3.9bn, up 81% on 2015. While commodity prices improved towards the end of the year, the group says higher prices were a relatively minor contributor to profit growth.
Glencore says that the improvement reflects a continuous focus on cost reduction, operational efficiency initiatives and some favourable currency movements.
The group operates through four divisions; 'Metal & Minerals', 'Energy products', 'Agricultural products' and 'Corporate and other'. In 2016, almost all of group profit came from the Metal & Minerals division, with losses from industrial activities in the 'Energy products' and 'Corporate and other' divisions negatively impacting performance.
Having reduced net debt by $10.4bn to $15.5bn, the group's debt reduction programme is now complete. Since September 2015, over $6.2bn was raised from disposals including 50% of its agriculture business ($3.1bn) and the Hunter Valley coal rail haulage business for $840m.
After suspending dividend payments for one year, in 2017 Glencore plans to return $1bn to shareholders in two equal tranches, after interim and full year results. Longer term, the new plan is to pay a fixed $1 billion component and a variable element representing a minimum pay-out of 25% of free cash flow from its industrial assets.
Unless otherwise stated, all estimated figures, including prospective dividend yields, are taken from a consensus of analyst forecasts compiled by Thomson Reuters. These estimates should not be taken as a reliable indicator of future performance.
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