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    Trafigura Profits Double, US LNG Helps

Summary

Despite flat revenues and similar trading volume, it profited more from the volatility.

by: William Powell

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Natural Gas & LNG News, Americas, Liquified Natural Gas (LNG), Corporate, Market News, News By Country, United States

Trafigura Profits Double, US LNG Helps

Trading house Trafigura Group delivered a strong performance during the first half of the company's financial year to March 31. US crude and LNG exports were among the causes, it said June 11.

Group revenues were flat at $86.297bn compared with $86.935 in the first half of 2018, as trading volumes and average commodity price levels broadly in line with last year. But profit for the period rose by 92% t0 $426mn from $222mn.

The company's restructured oil trading operation was able to quickly adapt to increased price volatility caused by geopolitical events during the period, as well as to benefit from its market-leading position in strategic commodity flows, notably the increase in exports of crude oil and LNG from the US, it said, without publishing any details.

Gross profit was $1.472bn, up by half from $979mn in the first half of 2018. Gross profit margin was 1.70%, up from 1.13% a year ago. Earnings before interest, tax, depreciation and amortisation were close to a record at $1.112bn, compared with $658mn a year ago.

Gross profit in oil and petroleum products trading was $1.035bn, nearly three and a half times higher than in H1 2018. While all of the division's books performed well during the period, the crude oil, gasoline, LNG and wet freight desks were the stand-out contributors, although the volume traded was down 7%.  Gross profit in metals and minerals fell by about a third to $437mn despite 3% more volume traded compared with this time last year, reflecting a slow start for the non-ferrous concentrates and refined metal books.

"Trafigura Group registered a sharp increase in profit for the first half of its 2019 financial year, with margins on oil trading showing an especially strong recovery," said CFO Christophe Salmon. "In commodity markets that remained fiercely competitive, the company prioritised profitable business over further volume growth and maintained a very robust financial position with ample access to liquidity. As a whole, these results once again demonstrate the benefits of our diversified business model, focused on two commodity clusters whose market cycles are largely uncorrelated."