Glencore (LON: GLEN) is postponing a decision on whether to proceed with a cash dividend of 20¢ per share totalling US$2.6 billion in 2020 due to the COVID-19 pandemic.
“When the board is in a better position to consider COVID-19’s updated impacts, the economic outlook, and the company’s prospects, expected alongside release of the group’s interim results in Q3 2020, it will then decide what level of distribution would be appropriate to make this year,” the company said in a news release.
The company explained that the move was “prudent” as management tries to maintain strong investment-grade credit ratings, and attempts to fulfil its target of lowering debt from US$17.6 billion at the end of 2019 to a range of US$14 billion to US$15 billion.
On a positive note, the Swiss commodities trader and mining company says it has refinanced and extended its revolving credit facilities on the same commercial terms as its 2019 facilities. It has refinanced US$10.75 billion of its 12-month short-term facilities and has extended its longer-term US$4.65 billion revolving credit facility to 2025.
“The ability to refinance these facilities in the current environment underlines the confidence that lenders have in Glencore’s outlook even during challenging times,” Edward Sterck, a mining analyst based in London for BMO Capital Markets, stated in a research note.
In mid-February, Glencore reported a net loss attributable to shareholders in 2019 of US$0.4 billion, after US$2.8 billion of impairment charges related to its African copper business. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 26% for the year to US$11.6 billion, while cash generated by operating activities before working capital changes dropped 22% to US$10.3 billion.
The company plans to provide updated production guidance for 2020 on April 30.
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