MINING group Xstrata is re-introduce dividend payments despite reporting a fall in full-year profits.
The company’s pre-tax profits fell to $1.87bn (£1.2bn) in 2009 – down from $6.05bn the previous year. One-off costs and lower commodity prices hit the company’s profits. But it said the medium-term outlook for commodity demand remained “very promising”.
Xstrata scrapped dividend payments for the first half of 2009 as it was squeezed by mounting debt and falling demand for metals in the global recession A final dividend of 8 cents per share will be paid in May.
Chief executive Mick Davis said: “Robust economic growth and demand for commodities from industrialising nations is likely to continue. The board’s increased confidence in the medium-term outlook for commodities and Xstrata’s encouraging prospects and financial position have enabled the resumption of dividend payments.”
Davis said the company would concentrate on expanding existing operations and not acquisitions. He added that the firm was not in merger talks with rival Glencore, but acknowledged that such a tie-up could create shareholder value.
He added: “Clearly, when one puts together a great trading house and a great mining house, you have the potential for value creation. But there is a wealth of other issues that one would have to think about in looking at that sort of combination. To start speculating about these types of things when there is nothing on the table doesn’t make much sense.”
Asia would be the main driver of metals demand as the pace of recovery in rich nations was uncertain, the company said. The results were released on the same day that Xstrata said it planned to lock workers out and shut operations at the Tahmoor coal mine in eastern Australia between 8 and 14 February in response to strikes and union wage demands.