Trafigura lifts profits sharply on back on oil business

Trafigura has lifted its full-year profits, benefiting from a “very strong” performance from its oil business which has forged close ties with Rosneft, the Russian oil group.

The rise in profits allowed Trafigura to hand $775m to the 600 staff who control the privately held commodity trading house through a share buyback. The amount it has paid out to senior executives and traders over the past three years now totals $2.5bn.

The scale of payments highlights the riches that have accrued to a small group of companies that control the trading of oil and related products such as petrol and diesel. Trafigura’s rivals include Vitol, the world’s biggest independent oil trader, Glencore, Gunvor and Mercuria.

Net profit rose 6.5 per cent to $1.1bn in the year to September as the Singapore-registered group took advantage of opportunities from the collapse in oil prices. Revenues were $97.2bn, down from $126.2bn a year ago, reflecting the collapse in commodity prices.

Earnings before interest, tax, depreciation and amortisation — which Trafigura says is the most accurate measure of its operating performance because it strips out investment gains and impairments — rose 43 per cent from the previous year to $1.86bn.

Profit margins jumped 69 per cent to 2.7 per cent.

“Performance was especially strong in crude oil, where we saw an increase in volumes sourced from Russia among other producing nations,” said Jeremy Weir, chief executive, in Trafigura’s annual report.

Weir said this was “an outstanding operating result” and the best trading year in the company’s history.

Trafigura was founded in 1993 by Claude Dauphin, who learnt his trade under Marc Rich, the oil dealer and fugitive.

Dauphin died of cancer this year while on business in Colombia.

The oil market rout which began more than a year ago, has presented highly favourable opportunities for trading houses such as Trafigura that can use their logistics and storage to exploit market dislocations.

Trafigura seized on some other opportunities during the oil price rout, by becoming one of the biggest exporters of Russian crude through a series of short-term pre-pay deals with sanctions-hit Rosneft.