Trafigura Group Pte Ltd delivers robust performance in challenging market conditions
Singapore, 7 December 2016 - Trafigura Group Pte Ltd (“Trafigura”), a market leader in the global commodities industry, has today announced results for the year ended 30 September 2016. In challenging global commodities market conditions Trafigura delivered a sound commercial and financial performance in 2016 once again demonstrating the Group’s resilience through the economic cycle.
The year showed continued profitable volume growth in both trading divisions, Oil and Petroleum Products and Metals and Minerals; and write-downs on some of the Group’s industrial and logistical assets, reflecting the impact of a more challenging business environment on the value of these assets.
The result was a profit for the year of USD975 million, a decrease of 12 percent from the figure of USD1,103 million recorded in 2015 which was a record trading year. Gross profit was USD2,291 million, also 12 percent down year-on-year, while revenue was flat at USD98,098 million, compared to USD97,237 million in 2015. EBITDA was USD1,628 million, down 13 percent on the 2015 figure of USD1,861 million. Competition remained intense in all the markets in which the company operates, which was reflected in a reduced gross margin of 2.3 percent from 2.7 percent in 2015.
Volumes grew strongly in the Oil and Petroleum Products Trading Division, which handled a daily average of 4.3 million barrels, 42 percent more than the daily average of 3 million barrels in 2015. Trafigura was also able to grow volume across its Metals and Minerals book by 13 percent overall to 59 million tonnes from 52.1 million in 2015 further enhancing the Group’s already significant share of these markets.
“Trafigura once again demonstrated its resilience through the economic cycle, reporting growth in trading volumes, and profit slightly lower than in 2015,” said Jeremy Weir, Trafigura’s Chief Executive Officer. “Conditions remained broadly favourable for trading in the oil market, featuring sustained price volatility and over-supply. The metals market continued to present significant challenges, although some positive signs became visible in some segments in the second half of the year. We were able to build volumes in both trading divisions thanks to our global reach, strong commercial relationships and an increasingly diversified global customer base.”
The depressed price environment had an adverse effect on the Group’s industrial assets, and action was taken to write down the balance-sheet value of certain assets. The sum of impairments made in 2016 amounted to USD365 million, partially offset by USD244 million from reversing a prior-year impairment on another asset.
Part of the Group’s conservative approach is to continue to reduce leverage and capital expenditure as compared with the levels seen in previous years. This key consideration also determined the approach to the landmark transaction that was announced post year end and is in the process of being completed, to acquire a significant minority stake in Essar Oil Limited of India. This will be financed on a non-recourse basis, with a limited equity contribution from Trafigura that is well within the Group’s reduced capital expenditure level for 2017.
“We expect challenging conditions to persist in commodities markets through 2017, with pressure increasing on producers and other players with large asset footprints. Accordingly Trafigura will continue to focus on running a resilient business focused on physical trading, logistics and risk management,” said Christophe Salmon, Trafigura’s Chief Financial Officer. “Trading these markets will require greater agility and financial strength than ever. By the same token, they will offer significant opportunities to those firms that navigate them successfully.”
For further information please contact:
Trafigura’s Global Press Office: +41 (0) 22 592 4528 or email@example.com
Notes to editors
Founded in 1993, Trafigura is one of the largest physical commodities trading groups in the world. Trafigura sources, stores, transports and delivers a range of raw materials (including oil and refined products and metals and minerals) to clients around the world. The trading business is supported by industrial and financial assets, including 49.6 percent owned global oil products storage and distribution company Puma Energy; global terminals, warehousing and logistics operator Impala Terminals; Trafigura's Mining Group; 50 percent owned DT Group which specialises in logistics and trading; and Galena Asset Management. The Company is owned by around 600 of its 4,100 employees who work in 61 offices in 36 countries around the world. Trafigura has achieved substantial growth over recent years, growing revenue from USD12 billion in 2003 to USD98.1 billion in 2016. The Group has been connecting its customers to the global economy for more than two decades, growing prosperity by advancing trade. www.trafigura.com