LONDON BRIEFING: Glencore Reinstates Dividend As Sets Out Climate Goal

(Alliance News) - Glencore reinstated its dividend as it reported on Tuesday annual earnings ...

Alliance News 16 February, 2021 | 8:10AM
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(Alliance News) - Glencore reinstated its dividend as it reported on Tuesday annual earnings against a tough backdrop brought about by the coronavirus pandemic and the need to address environmental demands.

For 2020, revenue was down 34% to USD142.34 billion from USD215.11 billion in 2019 and the net loss widened to USD1.90 billion from USD404 million.

Glencore's 2020 adjusted earnings before interest, tax, depreciation and amortisation was USD11.56 billion, marginally down from USD11.60 billion and beating consensus forecasts of USD10.70 billion. Adjusted Ebit came in at USD4.42 billion, up 6.5% from USD4.15 billion in 2019. The latest adjusted Ebit figure beat consensus of USD3.63 billion.

Glencore recommended a payout of USD0.12 per share, having scrapped its dividend in August last year due to the pandemic.

Referring to the dividend proposal, Glencore Chief Executive Officer Ivan Glasenberg said: "Strong second half cash flows repositioned net debt of USD15.8 billion within our target range, allowing for the resumption of distributions."

Glasenberg added: "As the world focuses on the pathway to recovery from Covid-19, it is clear that meeting the goals of the Paris Agreement has taken on even greater urgency. While innovation and technological advances have transformed how we live and work, the commodities needed to enable this have not. Our commodities are essential in developing all facets of infrastructure needed to deliver the goals of energy and mobility transition."

Glencore is a major coal producer. It promised on Tuesday "responsible stewardship of declining coal business over time as industry decarbonises". The miner also set a net zero carbon emissions ambition for 2050. It said it will put its climate strategy to an advisory vote at its annual general meeting in April.

"We remain focussed on creating sustainable long-term value for all stakeholders while operating in a responsible manner across all aspects of our business," Glasenberg said.

Glencore shares were up 3.3% early Tuesday in London.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: up 0.6% at 6,795.72

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Hang Seng: up 1.8% at 30,729.86

Nikkei 225: closed up 1.3% at 30,467.75

US markets closed for holiday Monday

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GBP: firm at USD1.3920 (USD1.3909)

EUR: flat at USD1.2131 (USD1.2129)

Gold: firm at USD1,820.27 per ounce (USD1,819.49)

Oil (Brent): firm at USD63.45 a barrel (USD63.33)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Tuesday's Key Economic Events still to come

China Lunar New Year public holiday continues. Shanghai market closed. Hong Kong reopens.

1100 CET EU gross domestic product

0830 EST US Empire State manufacturing survey

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UK Prime Minister Boris Johnson has said he is "hopeful" coronavirus restrictions can be cautiously eased in the coming weeks, with vaccines providing "grounds for confidence". Johnson said he wanted the current national lockdown to be the last – and for the unlocking to be "irreversible" – ahead of the publication of his road map next week. Johnson will analyse data this week on coronavirus case numbers, hospital admissions, deaths and the impact of the vaccine rollout as he prepares his plan to reduce restrictions. Preliminary data comparing elderly people who have received the vaccine with those who have not is starting to show it is cutting hospital admissions and deaths, according to The Times. The paper said ministers have already been given data showing vaccines are cutting illness by about two thirds, while a separate study suggests jabs are reducing transmission.

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Guidelines on the execution of England's new "red list" quarantine rules were reportedly only given to Border Force staff a few hours before they came into force. As of Monday, travellers arriving in England must quarantine in a hotel if they have been in one of the UK government's 33 "red list" countries – which covers Portugal, the United Arab Emirates, South America and southern Africa – in the past 10 days. However Border Force sources reportedly told The Guardian immigration control staff received a lengthy email with five attachments, detailing official guidance for executing the new border checks, at 9.25pm on Sunday. Under the new rules, immigration control staff must check each traveller's completed passenger locator form and hotel quarantine booking. They must also verify passengers have received a negative Covid test, along with evidence of two additional test bookings for their 10-day quarantine period.

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The UK's lower-income households are facing a higher risk of unemployment this year, as "deferred" company failures line up as the furlough scheme ends, experts will warn on Tuesday. The group has "dissaved" as their higher-income counterparts managed to build up an extra GBP125 billion worth of savings while being stuck at home, with little to spend the money on. Ahead of next month's budget, the Institute for Fiscal Studies and Citi Research said that it was vital to ensure that the furlough scheme and other UK government support is unwound gently, rather than coming to an abrupt halt. However, they also said that the economy will not be able to adjust properly as long as the furlough scheme is still in place. It should be "phased out as soon as conditions allow", the researchers said. However, the GBP20 a week increase that people on Universal Credit have been handed could stay, they argued.

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BROKER RATING CHANGES

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SOCGEN RAISES SSE PLC TO 'BUY' ('HOLD') - TARGET 1650 PENCE

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JEFFERIES RAISES ROYAL MAIL TO 'HOLD' ('UNDERPERFORM') - TARGET 450 (300) PENCE

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JEFFERIES RAISES ROTORK TO 'BUY' ('HOLD') - TARGET 420 (350) PENCE

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COMPANIES - FTSE 100

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Anglo-Australian miner BHP Group hiked its interim dividend, as profit and revenue rose on higher metal prices and strong output at several of the group's assets. For the six months to the end of December, pretax profit rose 13% to USD8.83 billion from USD7.79 billion the same period the year before, on revenue that grew 15% year-on-year to USD25.64 billion from USD22.29 billion. BHP's profit performance was helped by a rise in iron ore and copper prices, as well as record output from its Western Australian Iron Ore business and record average concentrator throughput at the Escondida copper mine in Chile. Profit from operations increased 17% to USD9.75 billion from USD8.31 billion the prior year. BHP raised its interim dividend by 55% to 101.0 US cents from 65.0 cents the year before, while net debt as at December 31 fell 7% to USD11.84 billion from USD12.68 billion.

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Moody's Investors Service late Monday affirmed GlaxoSmithKline's and its financing subsidiaries' A2 long-term senior unsecured ratings. The outlook remains negative, the ratings agency noted. "Today's affirmation reflects the large size and leading positions that GSK will retain following the separation of its Consumer Healthcare segment in 2022 as well as our view that the group's diversity, albeit reduced, will remain high and supported by low concentration on top products," said Frederic Duranson, a Moody's assistant vice president & lead analyst for GSK. Moody's explained that the future separation of Consumer Healthcare will reduce GSK's size and diversity. What remains will be the more research & development-intensive and more volatile Pharmaceuticals & Vaccines segments which have a higher business risk profile, Moody's noted.

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COMPANIES - FTSE 250

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Playtech said it has signed strategic agreements with various subsidiaries of Greenwood Racing, which owns and operates the Parx Casino in Bensalem, Pennsylvania. The agreements include licensing of Playtech products to the Greenwood companies in the US states of Michigan, Indiana, New Jersey and Pennsylvania, commencing with the launch of online casino in Michigan on Playtech's IMS Platform and Player Account Management. "This strategic partnership with the Greenwood companies represents a major milestone for Playtech and I'm excited to work with them to help achieve their growth plans in the coming years. The US is a highly strategic market and this multi-state, multi-product agreement highlights the demand for the full breadth of our product offering. This is the next step for Playtech in the US and we are delighted to work with the Greenwood companies to capture this exciting long-term opportunity," said CEO Mor Weizer.

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Serco Group also expanded in the US. It said it has agreed to acquire Whitney, Bradley & Brown, a provider of advisory, engineering and technical services to the US military, for USD295 million from an affiliate of Miami, Florida-based private equity firm HIG Capital. Serco said the acquisition will increase the "scale, breadth and capability" of Serco's North American defence business and will provide a strong platform from which to address all major segments of the US defence services market. The acquisition will be immediately accretive to earnings and will be funded through existing debt facilities, the company said. It is expected to complete in the second quarter of 2021, subject to regulatory approvals, Serco added. "Growing the scale, reach and capability of Serco in the largest defence market in the world is one of our strategic objectives, and the acquisition of WBB significantly advances that strategy. Following the acquisition of the Naval Systems business unit of Alion in 2019, which increased the size of our US Navy business by 70%, WBB takes our North American defence revenues to around USD1.1 billion and gives us credible positions in other parts of the market including Air Force, Space Force, Army, the Missile Defense Agency and the Office of the Secretary of Defense," commented Serco CEO Rupert Soames.

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COMPANIES - MAIN MARKET AND AIM

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Virgin Wines UK announced plans for an initial public offering on AIM around March 2. The IPO is being led by Liberum as Nomad and sole broker. Virgin Wines operates subscription wine buying schemes. It says it has 169,000 active customers, of which 147,000 have subscriptions. The IPO follows a GBP15.9 million management buyout in 2013 backed by Mobeus Equity Partners and Connection Capital. Virgin Wine UK recorded GBP4.8 million in earnings before interest, tax, depreciation and amortisation in the financial year that ended June 30, 2020 on revenue of GBP56.6 million.

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Cornish Metals completed its own AIM IPO, raising GBP8.2 million. The miner starts trading on Tuesday with a GBP18.7 million market capitalisation at its 7 pence IPO price. It said it plans to start drilling at the United Downs copper-tin project in Cornwall in late March or early April.

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Tuesday's Shareholder Meetings

Baronsmead Second Venture Trust PLC - AGM

BMO Capital & Income Investment Trust PLC - AGM

Dewhurst PLC - AGM

Nexus Infrastructure PLC - AGM

Ovoca Bio PLC - EGM re replacing Crest with Euroclear Bank

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By Tom Waite; thomaslwaite@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Glencore PLC 369.90 GBX -0.54
Rotork PLC 357.00 GBX 0.56 -
SSE PLC 1,627.00 GBX 0.71
Royal Mail PLC 425.10 GBX 1.94 -
Cornish Metals Inc 15.00 GBX 1.35 -
Cornish Metals Inc 0.25 CAD -2.00 -

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