London, England — MININGREVIEW.COM — 09 February 2010 – Swiss-based, diversified mining group Xstrata Plc has re-instated dividends, reflecting confidence about commodities demand and its finances, after posting an expected 41% fall in 2009 profit reflecting weaker metals prices.
Revealing this here, chief executive Mick Davis also told Reuters that he had not discussed a possible merger with Xstrata’s biggest shareholder, commodities trader Glencore, but said such a tie-up could create value.
Analysts said the decision to restart dividends after suspending them during the downturn to save cash was a surprise and helped push the shares higher.
“The group’s decision to re-instate the dividend is evidence of the board’s increasing confidence in the business outlook,” said Liberium Capital.
Xstrata “’ the world’s biggest exporter of thermal coal used in power plants “’ will pay a final dividend of 8 cents per share, and plans to resume a progressive dividend policy, chief financial officer Trevor Reid told Reuters.
“With this large capital commitment coming down the pipe we didn’t want to be slaves to an overly high level of dividends, so we started it at an appropriate level and we’ll seek to grow it from here,” he added.
Xstrata “’ the first major diversified miner to post earnings this season “’ said Asia would be the main driver of metals demand as the pace of recovery in rich nations was uncertain.
“Robust economic growth and demand for commodities from industrialising nations is likely to continue, Davis said in a statement. “The medium-term outlook for commodity demand remains very promising.”
Reuters reports that analysts will eye the outlooks of rivals BHP Billiton and Rio Tinto when they report on Wednesday and Thursday respectively.