Xstrata resumes dividend payouts

The Anglo-Swiss mining group Xstrata has reinstated dividend payouts after a break of a year-and-a-h

Despite reporting an expected 41 per cent drop in 2009 profits, the company says it is encouraged by the prospects of recovering demand from developing economies.

Xstrata, one of the world's largest mining companies, announced its pre-tax profits fell to $2.77bn (£1.78bn) last year from $4.7bn in 2008. It blamed the fall on reduced demand for commodities, lower commodity prices and increased costs.

The company had scrapped dividend payments for the first half of 2009 and the distribution will be the first since October 2008.

Analysts were surprised by the decision to restart dividends, saying it reflected Xstrata's "increased confidence in the medium term outlook for commodities and the company's encouraging prospects and financial position".

The payouts have helped push the company's shares higher, gaining 1.4 per cent. The miner's stock has outperformed the FTSE 100 by a wide margin, making it the fourth-biggest gainer on the index.