In its latest annual report, the Singapore based conglomerate said it kept a firm grip as a market leader in the global commodities industry, although the oil and refined product markets were still characterised for much of the year by oversupply and relatively low volatility, reducing margins and arbitrage trading opportunities.
“In this mixed environment Trafigura delivered a strong performance. Profit for the year was USD887 million, 9 percent below the level of USD975 million recorded in 2016, but broadly within the range of profits registered in each of the last five years. Gross profit was USD2,239 million, just 2 percent below the year-ago figure of USD2,291 million. Gross margin for the year was 1.6 percent, down from 2.3 percent recorded in 2016,” the company said in its report.
It further stated that its revenue increased by 39 percent to USD136,421 million from USD98,098 million, reflecting increased volumes and higher commodity prices.
“In commodity markets that are more competitive and transparent than ever, these results demonstrate the benefits of our scale, our resilient and diversified business model, as well as our ability to generate profit consistently throughout the economic cycle,” said Trafigura’s CEO Jeremy Weir.
Highlights of the year included significant growth in volumes handled by both trading divisions, Oil and Petroleum Products and Metals and Minerals, reinforcing the company’s position as a top-tier trader across these markets and in all important geographies.
The company’s global reach grew, for example through establishing a leading position in exporting crude oil and refined products from the US and the doubling of oil and products volumes sold into and out of India over the year.
A good profit performance was reported by all trading books, and a near-equal contribution to gross profit by both trading divisions. Metals and minerals had an exceptionally strong year across the board from non-ferrous concentrates to refined metals and bulk minerals; in oil and petroleum products profit was lower than last year owing to reduced market volatility and margin compression.
Trafigura continued to invest in industrial assets that support access to trading flows. These included investment in the world-class Indian refining and distribution business Essar Oil and through Galena Private Equity Resources Fund into Terrafame, the Finnish nickel, cobalt and zinc producer.
“During the year the company also announced support for a large order for oil tankers that will be used, when delivered, to carry Trafigura oil cargoes as well as to generate value,” the report noted.
The company was also able to renew and increase its credit facilities at tighter yields and returned to the debt capital markets in a limited way. “For 2018 we see a positive outlook for the markets in which we trade, underpinned by increasing demand, tightening supply and the potential for greater price volatility. As such we believe the need for the marketing, logistics and risk management services we provide can only grow over the coming year,” concludes Christophe Salmon, CFO for Trafigura.
Founded in 1993, Trafigura is one of the largest physical commodities trading groups in the world with focus on sourcing, storing, transporting and delivering a range of raw materials (including oil and refined products and metals and minerals) to clients around the world.
The trading business is supported by industrial and financial assets, including 49.6 percent owned global oil products storage and distribution company Puma Energy; global terminals, warehousing and logistics operator Impala Terminals; Trafigura's Mining Group and Galena Asset Management. The Company is owned by around 600 of its 3,935 employees who work in 62 offices in 35 countries around the world.