Glencore’s chief executive hailed the group’s results as the “strongest on record” as the Swiss miner and commodity trader continued its recovery based on stronger commodity prices while cutting costs.
Ivan Glasenberg said that Glencore expected to generate around $10bn of free cash flow this year that could be used as a war-chest to fund further acquisitions.
We work opportunistically,” he told reporters. “Right now there is no big idea on the radar screen, but look at what happened last year — opportunities presented themselves and we were able to move on them. Going forward we will do the same.”
A year ago, Glencore announced a $960m deal to buy Israeli billionaire Dan Gertler’s stakes in two copper and cobalt mines in the Democratic Republic of Congo.
The group’s other recent deals include last July’s purchase of a 49% stake in the Hunter Valley coal mines in Australia’s New South Wales and increasing its stake in Peruvian zinc miner Volcan. In October, Glencore spent nearly $1bn to acquire Chevron’s southern Africa oil assets
Glencore was among the groups hardest when commodity prices slumped in 2015-16, but has since rebounded and was the best-performing major mining group last year on the FTSE.
“These strong results were fuelled by solid underlying global economic growth, which combined with overall industry capital discipline and generally muted production growth, resulted in commodity markets tightening over the year, with a corresponding increase in prices and premiums,” said Glasenberg.
“Going forward, those commodities where primary market balances are in deficit or trending towards deficit, such as zinc, copper, nickel and thermal coal should see positive price divergence versus potentially oversupplied markets.”
The group posted full-year overall adjusted profit of $14.76bn (£10.5bn), with full-year adjusted EBIT of $3bn, above the range previously indicated. However, Glasenberg warned of “emerging inflationary pressures”. The CEO also indicated that Glencore was now looking to expand its agriculture business.
Glencore declared a 20 cents dividend for the year, paid out in equal parts in May and September, representing a $2.9bn return to shareholders.
Glencore shares were 15 pence higher at 399.5p, up nearly 4%, in mid-morning trade.