Glencore Xstrata adjusted profits flat, but ahead of forecasts

4th Mar 2014 07:22

- Earnings flat but beat forecasts- Growth limited by falling commodity prices- Las Bambas sale ongoingMining group and trading house Glencore Xstrata raised its full-year dividend by nearly five per cent, but earnings were flat in 2013 as growth was capped by falling commodity prices.Nevertheless, it still managed to beat consensus forecasts with its first set of annual results since the merger between Glencore International and Xstrata in May 2013.The company reported adjusted earnings before interest, tax, depreciation and amortisation of $13.07bn last year, more or less unchanged from 2012 but well ahead of the $12.3bn expected by analysts.Glencore Xstrata said that improved market results, increased production and productivity gains at many of its industrial operations and some merger related synergies all helped to offset the impact of weaker average commodity prices on its industrial activities.It has identified sustainable annual synergies from the merger of $2.4bn, the full benefit of which will be realised in 2014.The company has declared a final dividend per share (DPS) of 11.1 cents, bringing the full-year DPS to 16.5 cents, up 4.8% on 2012.While it was a strong year for production growth as previously reported - copper output up 26%, ferrochrome up 32%, coal up 4% - group revenues rose by just 1% to $239.67bn. "Our marketing division once again delivered a strong overall performance, while the modest year-on-year decline in our industrial asset performance inevitably reflected the weaker commodity price environment in 2013," said Chief Executive Ivan Glasenberg.Looking ahead, Glasenberg said that the company is seeing "healthy" demand growth across its key commodities, "underpinned by the long-term trend of urbanisation in emerging markets and parts of the developed world returning to trend growth".Meanwhile, Glencore Xstrata said that the sale process of its giant Las Bambas copper mine in Peru - a condition imposed by regulators at the time of its merger - is still ongoing, which may come as a disappointment to investors who were waiting for more information on a potential deal.Last week news surfaced that talks between the firm and the Chinese buyers of Las Bambas have hit a snag over the price. A person familiar with the matter said Glencore's reserve price is much higher than $5.5bn.BC