Commodity trader Trafigura nearly doubles profit to hit record in FY 2021 (updated)

Nyrstar NV

08/12/2021 12:47

* Traded oil volumes jumped 25% to record 7 mln bpd
    * Record dividend to employees of $1.1 bln
    * Income loss of $716 mln relating to Puma Energy foreign
currency
    * Impairments totalled $709 mln on Nyrstar, Corpus Christi,
Puma 

 (Adds comments from CFO interview)
    By Julia Payne
    LONDON, Dec 8 (Reuters) - Global commodity trader Trafigura
Group made a record net profit for a second year running in its
2021 financial year after a strong performance across divisions
and significant energy market dislocations.     
    The Geneva-based company posted a net profit of $3.1 billion
for its financial year ending Sept. 30, almost double the
previous year. 
    "Above all, the scale and resilience of our business
benefited from a flight to quality, both in terms of customer
relationships and financial liquidity," Trafigura Chief
Executive Jeremy Weir said in its annual report. 
    The COVID-19 pandemic roiled markets last year and saw a
number of smaller competitors exit or reduce their business,
allowing bigger players to step in and expand credit lines at
banks. 
    Trafigura's total earnings before interest, tax,
depreciation and amortisation (EBITDA) rose 13% to $6.9 billion.
Its energy segment - mostly oil, refined products and natural
gas - contributed 64% to the EBITDA. 
    Its metals and minerals division contributed 36% with an
"exceptional year" for its copper team due to significant demand
growth and a supply deficit, it said.
    Group revenue was $231 billion in 2021, up from $147 billion
in 2020 when commodity prices crashed due to the pandemic. 
    The company had impairments of $709 million, down compared
to $1.57 billion in 2020. The largest were at loss-making
smelter Nyrstar with $125 million, and Corpus Christi port in
Texas with a further $158 million relating to right-of-use
assets.
    In addition, Trafigura's income was reduced by a further
$716 million after absorbing Puma Energy's foreign exchange
losses though this translated to a increase in group equity. 
    Trafigura agreed to buy Angola's state oil firm Sonangol
31.78% stake in Puma Energy, a midstream and retail firm, with
Trafigura's stake rising to 93%. urn:newsml:reuters.com:*:nL8N2M91NZ
    Puma has $1.9 billion in assets up for sale, including in
Angola and its infrastructure division. Trafigura is also in the
process of selling its indirect stake in the Indian refiner
Nayara Energy and completing the sale of its stake in Spain's
MATSA copper mine.  urn:newsml:reuters.com:*:nL1N2S804U urn:newsml:reuters.com:*:nL4N2QP04L
    "We had significant capital expenditure in 2021. We took a
10% stake in Russia's Vostok Oil project and acquired Puma and
at the same time, to keep capital discipline we want to sell
assets. We have two assets up for sale, Nayara ... and the
second is MATSA," Trafigura CFO Christophe Salmon said.
    Trafigura said the number of employee shareholders has been
growing since it bought out the family members of founder and
former CEO Claude Dauphin in 2020. This year employee
shareholders hit about 1,000 compared with 850 in 2020. 
    Pay-outs to employees hit a record of $1.1 billion, nearly
double dividends in 2020 at $586 million. Group equity rose 36%
to over $10 billion.
    "It's the first time our equity base went over $10 billion.
It's is a great equity story. We started in 1993 with probably
$25 million. We will continue to grow," Salmon said.
    "The increase in our market share as really striking this
year. Oil flows rose substantially ... This is a reflection of
the continuing trend towards the consolidation of the commodity
sector around the big players that have much deeper access to
funding." 
    Its traded oil volume rose 25% year-on-year to 7 million
barrels per day (bpd), growing across regions as global demand
recovered with easing lockdowns while its traded non-ferrous
metals rose 9% to 22.8 million tonnes and bulk minerals were up
8% to 82.7 million tonnes.
    Crude oil volumes grew 22%, thanks in part to new offtake
agreements in Canada, Latin America and West Africa and a deal
to supply Britain's Lindsey oil refinery. It added that the
Midland shale oil basin in Texas remained core to the business.

 (Reporting by Julia Payne, additional reporting by Dmitry
Zhdannikov
Editing by Marguerita Choy and David Evans)
 ((julia.payne@thomsonreuters.com; +44 207 542 1836;))