Statement from the Executive Chairman and Chief Executive Officer
Strong commercial performance in a rapidly evolving market
I am pleased to present this interim financial statement from the Trafigura Group, covering the period from 1 October 2020 to 31 March 2021. It shows a strong commercial and financial performance in what continues to be a rapidly evolving business environment, with record net profit, gross profit and EBITDA for the period.
This outstanding first half performance reflects our continuing efforts to build customer business, expand our product footprint and adapt to structural changes across many commodity markets driven by the energy transition.
As the global economy emerged from the worst effects of the COVID-19 pandemic, commodity prices also recovered. Managing supply chains remained a key challenge, however, underlining the need for companies such as Trafigura to leverage their logistical, risk management and financial capabilities to help customers navigate fluctuations in supply and demand. Increased trading volumes in the period demonstrated that we are building customer business based on these capabilities.
The energy transition is creating additional needs for trading services, in markets such as electric power and carbon; accordingly our newly-established Power and Renewables trading division ramped up operations in the first half of this year, and we established a carbon trading desk in March. We also continued to build out our strategy for reducing greenhouse gas emissions from our own operations and from our supply chain, a topic of increasing importance to our commercial and financial counterparts.
We maintained an extremely robust financial position during the period, thanks to enhanced access to finance in a consolidating market and despite higher commodity prices, and continued to invest in a range of new ventures. These included the acquisition of a 10 percent equity stake in Russian oil and gas company Vostok Oil; an investment in nickel producer Prony Resources in New Caledonia; expanding operations and building the management team at our Nala Renewables joint venture; and a new collaboration with H2 Energy Holding AG, an innovator in commercial vehicles powered by green hydrogen, with which we have established a joint venture to expand operations across Europe.
This diverse portfolio reflects the changes we are making to position the company to contribute to and benefit from the energy transition in commodity markets. In metals, electrical infrastructure and electric vehicles are stoking demand for crucial materials such as copper, nickel and cobalt. In oil, there is a continuing need for investment in low-cost production to ensure that developing countries can maintain their access to energy during the transition to a lower-carbon world. More generally, entirely new markets are taking shape based on renewables and alternative fuels.
Trafigura’s investments in the first half are accompanied by ongoing activity to reduce the carbon footprint of our own operations, having set our first greenhouse gas reduction targets in January. We have made good progress towards achieving our target of a 30 percent reduction in Scope 1 and 2 emissions by 2023 compared to 2020, and we are working to better define and reduce Scope 3 supply chain and shipping emissions, with the aim of setting a Scope 3 emissions target well in advance of this same timeframe.
Securing access to critical minerals required for the energy transition must go hand in hand with increased transparency and due diligence into their responsible production and supply. In this regard, we continue to extend and operationalise our leading responsible sourcing programme, to undertake due diligence into potential social and environmental impacts in our supply chain.
Our existing industrial assets delivered improved performance. Nyrstar is showing better results thanks to its ongoing turnaround and investment programme, Puma Energy is continuing its restructuring, and the MATSA mining venture is making a strong contribution based on higher copper prices and increased production.
The Trafigura Group has emerged strengthened from the disruption caused by the COVID-19 pandemic, with a robust platform for sustained business growth and consistently strong financial performance. Our core trading divisions are firing on all cylinders, and our newer operations are rapidly gaining momentum in enlarging our service offering. Thus, while we do not expect to match the first half results in the second half of this financial year, we do expect very strong performance for the full year and look with increasing confidence to 2022.