Commodity trader Trafigura reported record net profits of $5.5bn in the first half of its financial year — more than double the same period 12 months ago — underscoring the bumper earnings these groups have reaped from the energy crisis.
It also paid a record $3bn dividend to be shared among about 1,200 shareholders in the privately held company, which are almost all traders and executives at the firm. That was up from $1.7bn in the previous year.
The numbers cushion the blow of the nearly $600mn impairment charge Trafigura took this year after it uncovered an alleged nickel fraud by a counterparty, one of the biggest scandals in the metals trading sector.
The company said it was still determining the extent of the fraud, pursuing alleged perpetrator Indian tycoon Prateek Gupta in London’s High Court, and examining whether the 1,100 containers involved contain any nickel.
Chief financial officer Christophe Salmon said Trafigura was taking legal action against the alleged perpetrator in “multiple jurisdictions”, the first time the group has indicated it is pursuing charges outside the UK.
Trafigura has also increased the size of the impairment charge related to the nickel case to $590mn, up from $577mn previously, due to extra costs incurred.
The results highlight how the largest commodity trading houses, the powerful companies that move raw materials around the world, continue to benefit from the disruptions triggered by the Russian invasion of Ukraine.
Trafigura’s financial year runs from September, and its half-year results cover the period until the end of March.
“Any dislocation of the supply chain means that our [logistical] services are taking more value,” said Salmon. “Our services were very needed by the supply chain, and we were key to ensuring security of supply, notably to western Europe.”
During the six months ending on March 31, 2023, the group reported net profit of $5.5bn, and earnings before interest, taxes, depreciation and amortisation of $8.1bn.
That period includes last winter, when Europe’s fears of blackouts and gas shortages following the war led to big swings in energy prices and a race to secure gas supplies.
One outcome of that was Trafigura’s $3bn, four-year deal to supply gas to Germany, which was partly underwritten by the German Export Credit Agency, Euler Hermes.
The bumper half-year profits will almost certainly contribute to another round of large bonuses at the end of the financial year.
Equity attributable to the company’s owners rose to $17.5bn at the end of March from $14.9bn at the end of September 2022.
Other large trading houses such as Vitol and Glencore have also benefited from the volatility and disruptions, with all the major traders reporting record earnings last year.
However, Trafigura signalled the earnings bonanza was unlikely to continue, and said that calmer market conditions lay ahead.
“We are seeing a return to more normalised market conditions,” said Salmon. “The profitability in the second half of the year, still being very solid, will be lower than what we saw in the first half year.”
During the first half of the financial year, Trafigura said that lower overall commodities prices led to lower overall revenue of $131.3bn, which is 23 per cent lower than the same period the previous year.
However, its margins rose, with net profit reaching 4.2 per cent of revenue during its first half, up from 1.6 per cent during the same period 12 months prior.
