Trafigura H1 profit falls 53% as metals gains can't offset oil drop

Geneva

TRAFIGURA Group posted its lowest first-half profit in at least four years as gains at its metals division failed to outweigh much weaker results from oil trading.

Net income fell 53 per cent to US$222 million in the six months through March, from US$471 million a year earlier, Singapore-based Trafigura said in a statement on Wednesday. That's the lowest since at least 2014 when the third-biggest independent oil trader and second-biggest metals trader started reporting half-year results.

Trafigura blamed the decline on the oil market's move from a contango structure - where traders can lock in profits by filling storage tanks with crude and selling futures contracts at higher prices - to backwardation where future prices are lower than current ones.

Trafigura's profit decline came despite record oil-trading volumes of 5.8 million barrels a day during the period. Gross profit in oil and petroleum trading skidded 54 per cent to US$299 million. Metals and minerals volumes increased by 48 per cent, with gross profit at the division climbing 16 per cent to US$680 million.

Overall gross profit fell 21 per cent to US$979 million. Trafigura's earnings before interest, taxes, depreciation and amortisation dropped by 29 per cent to US$658 million. Revenue, which is largely a reflection of commodity prices, climbed by 29 per cent to almost US$87 billion. BLOOMBERG