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Monday, March 1, 2021

Trafigura Reports Record Profits on ‘Unprecedented’ Volatility for Metals, Oil

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Commodities trading house Trafigura banked $6.06 billion in net profits this year, the most on record, it said in its annual results published on Wednesday December 9.

The Geneva-headquartered company leveraged a highly volatile year for materials around the world, brought about by the Covid-19 pandemic, to generate a 4.6 percent gross profit margin, 2.8 percent more than in 2019.

“It was a stunning year,” chief executive officer Jeremy Weir said in an accompanying video on the company’s website. Oil and petroleum made up the three quarters of Trafigura’s gross profits at $5.26 billion, triple that of 2019, with metals and minerals profits up by 29 percent.

The results show the ability of the big commodity traders — a group that includes Vitol, Glencore, Gunvor and Mercuria — to profit from the chaos in commodity markets as prices of oil and other raw materials crashed in March and April when containment measures to halt the pandemic hit demand.

In the year to September, Trafigura posted net profit of $1.6bn, up from $867.8m in 2019, its best result since 2013.  Gross profit hit a record $6.8bn, compared to $2.9bn in the same period a year ago.

Earnings before interest, tax, depreciation and amortisation came in at $6bn, up from $2.1bn. The company, which is based in Singapore but run from Geneva, said it spent $586m repurchasing shares from employees, up from $337m in 2019. Trafigura uses buybacks to return capital to its management and 850 senior staff.

The company highlighted its oil division’s bet on snapping up vast amounts of storage capacity as the pandemic hit, enabling it to buy up cheap barrels in the spot market to sell at a higher price once lockdowns eased.

Africa generally, and Nigeria in particular, has been a typical focus for companies such as Trafigura, both in terms of pure trading and extending finance to cash strapped domestic oil companies like Nigeria’s NNPC.

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