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Machinery is seen at the underground Glencore Plc Bracemac-McLeod zinc mine in Malartic, Quebec, Canada Photographer: Valerian Mazataud/Bloomberg

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(Bloomberg) -- Glencore Plc investors looking for bigger shareholder returns after the commodities giant’s record first-half profit may yet get their way.

While the company’s failure to increase its dividend or share buyback leaves the door open for more acquisitions, it emphasized that the focus will remain on cutting debt and returning money to shareholders. As far as potential deals go, Chief Executive Officer Ivan Glasenberg said there’s little out there.

“There nothing that looks that exciting. We don’t see anything great right now,” Glasenberg said on a call with investors. “But the thing we could do is return cash to shareholders.”

It’s been a tough year for Glencore, with challenges spanning from the Democratic Republic of Congo to Russia and, most worryingly, a corruption probe by the U.S. Department of Justice. The company didn’t provide any material updates on the DOJ probe in its statement Wednesday and interim earnings, while a record, slightly missed analyst estimates.

“There is no ‘big bang’ within today’s results,” RBC Capital Markets analyst Tyler Broda said in a note to investors. “The company is trading at a substantial discount to peers on a free cash yield basis with a strong balance sheet. This should open up more compelling opportunities for buybacks into 2019 or other options to compress this valuation disconnect.”

The shares declined as much as 3.5 percent and traded 0.8 percent lower at 12:20 p.m. in London.

Glencore has trailed its biggest rivals so far this year, with the stock falling about 17 percent while BHP Billiton Ltd., Rio Tinto Group and Anglo American Plc have all made gains. Last month, just days after the DOJ probe, the company announced it would buy back $1 billion of its shares in an attempt to bolster its stock price.

Read more: Glencore’s Poised for Record Profit Despite Horrible Year

While Glasenberg suggested shareholder returns might be favored, the company is famously aggressive when it comes to dealmaking and holding back its cash keeps that option alive. Earlier this year, the CEO said there was scope to do deals and the company has said it wants to grow its agriculture unit. In 2017 Glasenberg made an informal takeover approach for U.S.-based grain trading rival Bunge Ltd.

In the last 12 months, Glencore has agreed to buy a $1.7 billion coal mine from Rio Tinto and announced a $1 billion deal to buy Chevron Corp.’s oil refinery and fuel service stations in southern Africa.

Glencore’s wait-and-see results stand in stark contrast to rivals Rio Tinto and Anglo American. Last week, the former said it would would funnel $7 billion back to shareholders this year, while Anglo committed to growth, giving the go ahead for a new $5 billion copper mine in Peru.

For Glencore, “the tone of presentation comments suggest lower likelihood of M&A in favor of increased returns, most likely via further buy-backs than dividends,” Barclays Plc analysts said.

The company reported adjusted earnings before interest, taxes, depreciation and amortization of $8.27 billion, up 23 percent from a year ago. That fell short of the $8.55 billion average analyst estimate. Debt fell to $9 billion, well below its target range.

Earnings benefited from a surge in coal prices, increased copper production and strong results from its trading business.

However, like Rio last week, Glencore reported pressure from rising costs in the first half that are biting across the sector. The company said its slightly disappointing earnings were partly affected by higher-than-expected costs at copper and zinc mines. It also had an underwhelming performance in agriculture.

(Updates with CEO comments in third paragraph.)

To contact the reporter on this story: Thomas Biesheuvel in London at tbiesheuvel@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Liezel Hill, Nicholas Larkin

©2018 Bloomberg L.P.

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