June 07, 2024 [Oilprice]- Singapore-based oil and commodities trading powerhouse Trafigura Grouphas posted the smallest profit since the 2020 oil crisis as volatility in energy markets hit new lows. Trafigura’s net profit dropped to $1.47 billion in the six months through March, good for a 73% decline from a record $5.5 billion posted a year earlier.
The company’s revenue fell 5.4% to $124.2 billion, while group equity increased to $17.3 billion. The company’s energy division saw operating profit before depreciation and amortization drop by half, to $3.35 billion while the metals division recorded an 11% increase from a year earlier thanks to easier comps after the company took a large impairment charge for an alleged nickel fraud. Trafigura is still dealing with the fallout of a massive alleged nickel scam that rocked global metal markets last year, as well as the effects of past corruption scandals, as detailed by the Financial Times.
“In a less stressed environment than the same period a year ago, demand for our services remained strong,” Chief Executive Officer Jeremy Weir said in the report published on Thursday. “In the near term, supply chain disruptions continue to persist, including due to ongoing threats in the Red Sea and commodity markets remain vulnerable to sudden shocks and price spikes.”
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The latest set of results signal that a period of record profitability for the commodities trading industry fueled by Covid-19 and Russia’s war in Ukraine is coming to an end. The past three years have seen dramatic price swings that tend to favor top commodities traders. For some time now, Trafigura and its peers have warned that the blowout profits they have been posting over the past couple of years are unlikely to be sustained over the long-term, although many industry experts believe that the baseline has been set higher.
Over the past decade, Trafigura has grown into one of the biggest diversified commodities traders in the world. Last year, the firm traded an average of 5.5mn barrels of oil a day–the equivalent of the combined oil demand of the UK, France, and Germany–and sold more than 100 million tonnes of metals and bulk commodities, including coal. Trafigura’s full FY 2023 revenue of $244 bn exceeded those of British oil major BP Plc.
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