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Glencore - dividend returns after a better second half

Nicholas Hyett, Equity Analyst | 16 February 2021 | A A A
Glencore - dividend returns after a better second half

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No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Glencore plc Ord USD0.01

Sell: 445.15 | Buy: 445.40 | Change 3.45 (0.78%)
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Glencore reported a full year loss of $1.9bn in 2020, primarily reflecting lower commodity prices in the first half and over $6bn in write downs. Underlying cash profits (EBITDA) were flat at $11.6bn.

Net debt has been reduced to $15.8bn, which is now within the $10-16bn target range. As a result, the board is proposing a 2021 dividend of $0.12 per share.

The shares rose 2.3% following the announcement.

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Full Year Results

Cash profits in the Marketing division rose 42% to $3.7bn, as the division benefitted from increased volatility in commodity prices. Metals & Minerals adjusted cash profits rose 51% to $1.7bn. In the Energy division adjusted cash profits rose 36% to $2.1bn as oil trading delivered a record year thanks to increased demand for storage and logistics and the big moves in the oil price. Glencore is maintaining its long-term guidance for the division for between $2.2bn and $3.2bn in underlying operating profit.

Industrial cash profits fell by 13% to $7.8bn thanks to weaker commodity prices, especially for coal, and disruption to oil and coal operations due to the pandemic. Cash profits in the Metals & Minerals division were up 31% to $7.3bn, in part reflecting a big swing at the Katanga mine which drove the African copper portfolio to a $712m cash profit. However, cash profits were down 73% to $1.0bn in the Energy division, reflecting both lower production and prices.

Net debt fell during the second half from $19.7bn to $15.8bn, around 1.4 times cash profits., Glencore expects around $7.2bn in annualised free cash flow at January 2021 prices.

Glencore key facts

  • Price/Book ratio: 0.78
  • 10 year average Price/Book ratio: 1.0
  • Prospective dividend yield (next 12 months): 3.4%

All ratios are sourced from Refinitiv. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn't be looked at on their own - it's important to understand the big picture.

Find out more about Glencore shares including how to invest

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.