Glencore Sees Possible Return to Dividend in '17 After Debt Cuts

  • Dividend payments next year `open to deliberations': CFO
  • Glencore scrapped payouts last year as part of debt-cut plan

Why the Worst Might Be Over for Glencore

Glencore Plc, the commodity trader and miner that scrapped its dividend last year because of concerns about its debt load, said it may resume shareholder payouts in 2017 as it strengthens its balance sheet.

The Swiss company’s shares plunged 70 percent last year, prompting a debt-reduction plan that included stopping dividends and selling assets and new stock. Glencore on Tuesday expanded its target to cut debt by a further $1 billion to $17 billion by year-end.

“2017 is going to be very much open to deliberations,” Chief Financial Officer Steven Kalmin said on a call with reporters. “At some point in time, you get your debt levels down to a reasonable level, you’re generating $3 billion plus of cash flow then clearly the ability to both make and sustain distributions at some point from a position of strength is going to be on the agenda.”

Glencore, which was last year’s second-worst performer in the U.K.’s benchmark stock index, reported a 69 percent plunge in adjusted full-year net income after prices for metals and oil tumbled amid a slowdown in top user China. Chief Executive Officer Ivan Glasenberg today said commodity prices have bottomed and demand from China has been encouraging.

“The priority is clearly debt reduction, get it to a level where we are comfortable,” Kalmin said, adding that the company is satisfied with debt at about $17 billion.

Glencore shares rose 1.7 percent to 135.45 pence by 8:35 a.m. in London and reached the highest since October.

“The manner and timing of future distributions will be determined after consultation with shareholders,” the company said in a statement.

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