24 February 2017 by lberuti
The bruising first quarter of 2016 is now a distant memory for investors who waged some of their money on commodity related companies. AALLN (Anglo American Plc), MTNA ( ArcelorMittal SA ) and TKAGR ( ThyssenKrupp AG ) all reported in the last few weeks and beat analysts’ estimates. GLEINT ( Glencore Plc ) was the last to publish numbers yesterday, and they showed that they are also firing on all cylinders. The company swung back into the black in 2016, turning a pre-tax profit of $1.38bln. It reaped the benefits of rising prices in key commodities such as coal, zinc and copper, as well as falling costs and currency fluctuations. It beat consensus on its key target metrics, including net debt reduction. The latter had soared as high as $30bln in 2014 in the wake of the takeover of Xstrata. At the end of last year, it stood at $15.5bln - a reduction of $10.4bln in 12 months -, well below its own target. So much so that Mr Glasenberg said GLEINT should be able to “kick out a big dividend”. Credit investors have already been rewarded with a 1,200bps reduction in the company’s 5-year risk premium. From a high of 1,339bps in January 2016, it closed at 155bps today!