Trafigura profit rises 6.5% to $1.1b

Oil trading volumes surged 22% to a record 146.3m metric tonnes

Trafigura Pte Ltd said adjusted profit climbed 6.5 per cent as record oil-trading earnings countered a difficult year for its metals business and a series of write downs.

Profit including investment gains and write downs rose to $1.1 billion (Dh4 billion) in the 12 months through September 30, from $1.04 billion the previous year, the third-largest independent oil trader said yesterday in a statement on its website.

Revenue fell 23 per cent to $97.2 billion as prices for commodities from aluminium and zinc to crude fell to six-year lows.

Oil traders at the Singaporebased company with major trading operations in Geneva benefited from a market structure known as contango, allowing them to lock in profits by buying and storing oil to be sold at higher prices in the future.

Chief Executive Officer Jeremy Weir took over the leadership of the metals and minerals division in May after Simon Collins was the first of a number of senior departures. Weir became CEO last year when he replaced co-founder Claude Dauphin, who died in September.

“Oil performance was strong due to low prices, volatility and a contango-structured market which allowed us to benefit out of our storage positions,” Weir said in video posted on the company’s website.

Rosneft business

Oil trading volumes surged 22 per cent to a record 146.3 million metric tonnes as the company handled more than 3 million barrels a day and struck deals to boost business with Rosneft, the Russian state-controlled oil producer operating under US sanctions.

Gross profit rose to $2.6 billion, an increase of 28 per cent from 2014, closely held Trafigura said. This represents a gross margin of 2.7 per cent compared with 1.6 per cent the year before. Earnings before interest, taxes, depreciation and amortisation climbed 43 per cent to $1.86 billion.

Metals and minerals volumes increased by 6 per cent to 52.1 million metric tonnes.

The gain came even as a slowing Chinese economy cut demand amid supply gluts and lower prices, according to Trafigura, the second-largest metals trader.

Trafigura said it increased trading volumes in non-ferrous metals concentrates as well as liquefied natural gas. The company has market-leading positions in both sectors, it said.

The yield on Trafigura’s bond due in 2018 climbed to a record 10.79 per cent on December 11, as investors fretted about commodity companies debt following restructurings at publicly listed traders Glencore Plc and Noble Group Ltd.

Weir said in the video that Trafigura will remain owned by a group of 600 employees with no plans for a public listing.

“We have a long record of sound finances, strong liquidity and robust credit management,” he said. “We remain price agnostic to commodity prices.”