Ivan Glasenberg, the billionaire creator and chief executive of Glencore, today managed to do what few of his rival global miners have recently and gave investors a reason to cheer.
Just a day after rival BHP Billiton detailed the $15 billion (£9 billion) spin-off of its smaller businesses to a less-than-ecstatic reaction from shareholders, Glasenberg upped the ante with a $1 billion buyback of Glencore shares.
Barclays mining analysts judged the mood, commenting: “Finally someone is listening to shareholders.”
Glencore shares rose 2p to 360p and are up 17% since the start of the year. BHP Billiton shares, by contrast, fell 5% yesterday and dipped again today. They are up less than 5% this year.
Glencore’s first-half earnings after tax rose 12% to $2 billion, which was slightly ahead of market forecasts. Commodities trading was the powerhouse with mining for industry putting in a slower but again better-than-expected performance.
Glasenberg said: “Glencore continued to make decisive progress in delivering on the potential created by the Xstrata acquisition over the first half of 2014.”
He was also upbeat on prospects, saying supply in many commodities was coming back to demand levels, having outstripped them since 2010.
Glencore, which bought rival Xstrata for $29 billion last year, said it would return $1 billion to shareholders through a share buyback over the next six months.
Glasenberg said: “Our goal remains to grow our free cashflow and with it the base dividend, while maintaining balance sheet efficiency and a strong investment grade rating.
“We will further revisit the outlook for both the base dividend and equity buybacks at our preliminary results in March 2015.”
JPMorgan analysts welcomed the move, saying: “We view it as a powerful signal of intent from management, with Glencore the first of its peers to return excess capital to shareholders.”
Glencore also hiked its interim dividend by 11% to six cents a share. That means Glasenberg, the second-largest shareholder after Qatar with an 8.3% stake, will collect a dividend cheque for $66 million.
Analysts expect the final dividend to be almost double the interim one to see a payout of 17 cents a share.
