MARKET: REPORT: Glencore’s £ 860million dividend payout as profits climb to £ 1.4 billion
Glencore will return an additional £ 860million to investors after the mining and commodities trader posted record profits.
The Switzerland-based group will pay a special dividend of £ 380million and repurchase more shares after months of soaring commodity prices that have swelled its coffers.
The FTSE 100 group made £ 1.4bn in the first six months of the year, compared to a loss of £ 3.7bn in the same period of 2020.
Glencore to return another £ 860million to investors after mining and commodities trader posts record profits
It was the first round of results under the leadership of Glencore CEO Gary Nagle, who took over from longtime boss Ivan Glasenberg this summer. Glencore’s pledge comes on top of a £ 1.1bn dividend already declared for the year and comes in the midst of a stellar earnings season from London Stock Exchange heavyweight miners.
They all boosted their returns for investors, as the global economic recovery triggered a rise in the prices of key materials such as copper and iron ore, a steel ingredient. This has sparked discussions of a commodities ‘supercycle’, which could see prices rise and rise for years to come.
Glencore believes so, as do many analysts and companies who argue that the green revolution and huge post-Covid infrastructure spending means there will be rampant demand for years to come.
But the effect that short-term price fluctuations can have was visible yesterday. Footsie’s miners all fell after iron ore futures deteriorated, falling 6% overnight Wednesday.
STOCK WATCH: Naked wines
Shareholders toasted Naked Wines after the company’s exclusive beverage line won a record decanter World Wine Awards medal.
The retailer won two platinum, seven gold, 48 silver and 105 bronze awards in the world’s largest wine competition. Its drinks made in the United States performed particularly well, winning more than half of the total catch.
The AIM-listed company was previously known as Majestic, but was renamed after offloading its store base in 2019 to focus on its online subscription service, Naked Wines. Stocks rose 0.8%, or 7p, to 853p.
The price swing is explained by sluggish demand in China, which is the biggest consumer of raw materials. He asked his steelworks to limit their production to reduce pollution. And the Delta variant outbreaks in China have also sounded the alarm. Anglo-American (down 5%, or 173.5p, to 3270.5p) fell to the bottom of the Footsie rankings, followed by Rio Tinto (down 4.2%, or 265p, to 6027p) and BHP Group (down 3.8%, or 90p, to 2280p).
Glencore, which does not mine iron ore but markets it to some customers, fell 1.6%, or 5.3p, to 324p. The iron ore upheaval also dragged down the steel group Evraz, which closed down 1.4%, or 8.6p, at 601p despite news that profits more than doubled in the first half of the year.
The mining slump led to the FTSE100 in the red, the index decreasing slightly by 0.05%, or 3.43 points, to 7120.43. the FTSE 250 rose 0.7%, or 158.38 points, to 23,506.11, although the mid-cap gold miner Centamine (down 3.2 or 3.4 pence to 102.65 pence) also recorded losses after saying both profits and production were at a standstill. Hammerson was also in the red, falling 4.8%, or 1.77p, to 35.71p after accusing the eviction ban of slowing its recovery and saying it would turn empty stores into hotels, offices and houses.
Real estate agent Savills, on the other hand, was a winner. Shares rose 7.8%, or 90p, to 1250p after the stamp duty cut and cheap mortgages helped it explode to record profits of £ 64million in the first half of the year. This was double the same period of 2019 and eight times more than in 2020.
WPP the results also impressed, as the advertising giant revealed revenue reached £ 6.1bn and had returned to pre-Covid levels a year earlier than expected. Businesses have increased their marketing budgets, especially online, as economies reopen.
Shares of WPP rose 2.7%, or 25.8p, to 966.8p. And Cineworld jumped 4.2%, or 2.62p, to 65.48p, with data showing the UK box office posted its best performance last weekend since the start of the pandemic. Revenue from July 30 to August 1 was £ 11million – the highest since February 2020, according to the UK Cinema Association. DC Comics’ epic The Suicide Squad and Walt Disney’s Jungle Cruise were among the big hits.