Ivan Glasenberg, the billionaire creator and chief executive of Glencore, yesterday managed to do what few of his rival global miners have recently – give investors a reason to cheer.
Just a day after rival BHP Billiton detailed the $15bn (£9bn) spin-off of its smaller businesses to a less than ecstatic reaction from shareholders, Mr Glasenberg upped the ante with a $1bn buyback of Glencore shares.
Barclays mining analysts judged the mood, commenting: “Finally, someone is listening to shareholders.”
Glencore shares rose1.55p to 360.5p and are up 18 per cent since the start of the year. BHP Billiton shares, by contrast, are up less than 6 per cent this year.
Glencore’s first-half earnings after tax rose 12 per cent to $2bn, which was slightly ahead of market forecasts. Commodities trading was the powerhouse, with mining for industry putting in a slower but better than expected performance.
Mr 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 that supply in many commodities was now coming back to demand levels, having outstripped them since 2010.
Glencore, which bought rival Xstrata for $29bn last year, said it would return $1bn to shareholders through a share buyback over the next six months. It had earlier hinted at a buyback when it completed the $6bn sale of its Las Bambas copper mine in Peru, to a consortium led by China’s MMG.
Mr 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.”
Analysts at JP Morgan 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 per cent to 6 cents a share. Mr Glasenberg, the second largest shareholder after Qatar, will collect a dividend cheque for $66m. Analysts expect the final dividend will be almost double the interim one, at 17 cents a share.