By Nicholas Earl
Global commodities giant Trafigura posted a record net profit of £4.4bn ($5.5bn) in the first half of its 2023 financial year that ended in March, double the amount it earned for the same period in 2022.
The Geneva-based trader said its oil, natural gas and LNG teams delivered a strong performance. The result is already 80 per cent of its record full year in 2022 of £5.6bn ($7bn) and came in despite revenue falling 23 per cent to £105.1bn ($131bn).
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to £6.42bn ($8bn), up from £3.2bn ($4bn) in the first half of 2022.
The company however does not expect its string of exceptional returns and growth to continue at the same speed. The COVID-19 pandemic followed by sweeping Western sanctions on Russia for its invasion of Ukraine created extreme market dislocations over the last few years that have boosted trading houses’ profits.
Soaring prices, particularly in natural gas and liquefied natural gas (LNG) after Russia turned off the taps, proved a boon for major commodity trading houses. Rival trading house Vitol made £12bn ($15bn) in net profit for the full year 2022.
“We are seeing a return to more normal and calmer market conditions. Therefore, we expect the pace of our growth to slow compared to the previous 12 months,” Trafigura CFO Christophe Salmon said in a statement.
“We are also conscious that there are a growing number of headwinds, including inflationary pressures, higher interest rates and ongoing geopolitical tensions, which could impact global economic growth.”
The company’s metals division was hit hard by a major nickel fraud scandal resulting in an impairment of £474.3m ($590m), according to the results, and a 54% drop in operating profit for the division.
In February, a London court imposed a freezing order at Trafigura’s request on the companies and assets of Indian businessman Prateek Gupta and his wife after the trader inspected 156 out of 1,104 containers delivered by Gupta and found that none of them contained nickel.
Reuters – Julia Payne
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