Glencore suspends dividends to cut debt


Glencore suspends dividends to cut debt

Published Date: 2020-08-07 | Source: Stephen Gunnion | Author: Stephen Gunnion

Glencore suspends dividends to cut debt

The mining and commodities marketing giant is prioritising debt due to the uncertainties presented by Covid-19.

Glencore has suspended distributions to its shareholders so it can strengthen its capital structure due to the extreme uncertainties presented by Covid-19. Although it delivered what it described as a 'pleasing' business performance for the first half of its financial year, it said no dividends would be paid this year as it prioritised reducing its debt.

The mining and commodities marketing giant reported a net loss for the six months to end-June after its impaired its assets by $3.2 billion due to lower commodity prices as a result of the uncertainty arising from the pandemic. However, its operating performance was positive, supported by its marketing operations.

The group's counter-cyclical Marketing arm delivered a half-year record adjusted EBIT (earnings before interest and tax) of $2 billion, allowing it to raise its full-year guidance to the top end of its long-term $2.2-$3.2 billion range. It said oil in particular was able to capitalise on the presence of exceptional market conditions.

For the period, adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 13% to $4.83 billion. It reported a net loss of $2.6 billion, down from earnings of $226 million, and a loss per share of 20c as a result of the impairment. Cash generated by operating activities declined by 20% to $4.32 billion. Net debt rose 12% to $19.7 billion. It has a target of below $16 billion.

Its shares fell 4.1% to R41.73 yesterday.

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