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Commodity trader Trafigura will pay out a record dividend of $5.9bn to the company’s 1,200 shareholders after reporting its highest-ever net profit, but flagged a significant slowdown in the second half of the year as the energy crisis abated.
The privately held group’s bumper payout to executives and traders was more than triple the $1.7bn handed out last year and takes total payments since 2020 to more than $9bn, capping one of the most profitable periods in the commodity trading sector’s history.
The record dividend averages approximately $5mn per shareholder, although many staff will receive much more.
Trafigura made record net profits of $7.4bn compared with $7bn the prior year, but $5.5bn of its 2023 earnings were made in the first half of its financial year, which runs until the end of September.
The first half covered more of the peak of the energy crisis triggered by Russia’s disruption to gas supplies following its invasion of Ukraine. Energy markets have calmed in recent months.
Net profits in the second half of its 2023 financial year were $1.9bn. Overall gross profit margins were 5.2 per cent, up from 3.8 per cent in 2022.
At the same time Trafigura’s effective corporate tax rate fell from 12 per cent in 2022 to 8 per cent in 2023, due to the recognition of some historic tax losses and higher earnings in lower tax jurisdictions, it said.
Trafigura has its headquarters in Singapore, but the bulk of its staff, including its chief executive, are based in Switzerland. It has assets ranging from mines and ports to energy infrastructure across 150 countries.
“We see the performance of the group in the second half of the 2023 financial year as more representative of the result that can be expected in 2024,” said Trafigura’s chief financial officer Christophe Salmon.
“We expect margins to return to more customary levels in 2024, should market conditions continue to normalise,” though they said markets remained “fragile”.
The commodity trading sector has enjoyed a huge increase in profits since 2020 when the coronavirus pandemic first disrupted global supply chains and stoked volatility in energy and metals prices.
Trafigura’s total group equity has more than doubled in the past four years, rising to $16.5bn from $6.8bn in 2019, with roughly half of the company’s returns retained within the group while the rest has been paid out in dividends.
The bumper profits for the 2023 financial year were driven by Trafigura’s energy traders, who made earnings before interest, tax, depreciation and amortisation of $11.1bn, dwarfing the $1.6bn recorded by its metals, minerals and bulk commodities division.
The metals business has been weighed down by a charge of $578mn related to an alleged nickel fraud that Trafigura has blamed on Indian businessman Prateek Gupta, who in turn has accused the trading group of being involved in the scheme, which it denies.
The energy trading division, which includes oil and petroleum products, as well as gas, power and renewables, was the principal beneficiary of the price volatility precipitated by Russia’s invasion of Ukraine in 2022.
Chief executive Jeremy Weir highlighted Trafigura’s gas and power activities, which are focused on the US and Europe, and have emerged as the third pillar for the company, alongside oil trading and metals and bulk commodities.
“Gas and power really has grown enormously,” Weir said. “It complements the other parts of our business so we understand the energy stack very very well.”
Trafigura has also recorded a provision of $127mn in its 2023 accounts on Friday, to resolve a probe by the US Department of Justice over past “improper payments” in Brazil, which it revealed this week.