Glencore benefits from price rise for commodities

AP News
Posted: Mar 05, 2012 7:29 AM
Glencore benefits from price rise for commodities

Commodities giant Glencore International PLC reported a 7 percent rise in full-year profit Monday, citing rising prices for key raw materials such as oil, copper and wheat, and steadily growing demand in developing countries.

The Swiss-based company, which is trying to convince investors of the merits of a merger with Anglo-Swiss mining group Xstrata PLC, said net profit reached $4.06 billion in 2011, compared with $3.8 billion the previous year.

Excluding significant items, income attributable to equity holders reached $4.05 billion last year. Revenue increased 28 percent to $186.15 billion last year, from $145 billion in 2010.

"Market conditions have improved and the year has started well across all segments of our business," chief executive Ivan Glasenberg said. "Emerging market urbanization will continue to increase commodity intensity per capita as the demand for goods and products that industrialized societies take for granted increases."

Analysts had expected slightly better results from a company that is the seeking the support of investors in its $10 billion IPO last year that they made a good deal, and that the merger with Xstrata makes sense.

Glasenberg dismissed suggestions that Glencore might raise its bid for Xstrata, as some investors have demanded. Glencore is currently offering 2.8 of its own shares for every Xstrata share, valuing the deal at about $90 billion.

"It ain't a takeover, it's a merger of equals," he told reporters. However, he added that "for the sake of getting the deal done we were prepared to pay a premium."

Glasenberg, who owns 15 percent of shares in Glencore, will make tens of millions of dollars from the company's proposed full-year dividend of $0.10 per share.

"It is my intention to reinvest this dividend back in the company," he said.

The value of Glencore's stock fell 1.8 percent to 412.45 pence ($6.53) by noon on the London stock exchange.