Glencore in a giving mood

Management said profitability had improved largely thanks to increased output following the acquisition of Xstrata; the interim loss in 2013 was largely attributable to a $7.7bn write-down associated with the acquisition of the Anglo-Swiss miner. The group has subsequently endeavoured to drive through cost synergies, but there is little evidence that these are starting to flow through.

The group's business model is split between its industrial and marketing activities across three broad commodity areas: metals and minerals, energy products, and agricultural productions. Only the energy products segment delivered top-line growth over the period, although a steep rise in margins enabled the metals and minerals unit to drive up adjusted cash profits by 14 per cent to $4.4bn. This segment is likely to benefit from a strong recovery currently under way in prices for nickel and zinc - although this won't become apparent till the year-end.

The return to shareholders has been made possible by a deal to offload the Las Bambas copper mine in Peru to a consortium comprised of MMG (the offshore arm of China Minmetals Corp), Hong Kong-based Guoxin International Investment Corp, and Citic Metal Co. The April sale generated around $6.3bn, which helped bump up Glencore's funds from operations by 15 per cent to $4.9bn. Though relatively modest when set against Glencore's market cap, the buy-back signals that the group is confident of generating strong cash flows despite faltering commodity prices.

Glencore's preference for returning funds to shareholders is also significant in light of the proliferation of mining assets up for grabs. Perhaps burnt by Xstrata, it apparently isn't going to snap up big-ticket assets just for the sake of it.

Morgan Stanley expects full-year EPS of 35¢ - rising to 45¢ in 2015.