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08/01/18 10:54

Great moves among big three commodity trading players around the world

Trafigura satisfied with 2017 performance despite figures are all quite negative. Cargill to join Bunge, ADM and local partner on mega railway project to Brazilian ports. Rio Tinto pushes on driveless rail project to implement efficient mining logistics in Australia

Trafigura Group Pte Ltd announced “another year of strong trading performance and profit”, said the commodity trading house, despite figures were all quite negative in strict mathematical terms.

The robust global economy drove strong growth in demand for all the commodities that the company trades and a tightening supply-demand balance pushed prices of many products higher. However, the oil and refined product markets were still characterised for much of the year by oversupply and relatively low volatility, reducing margins and arbitrage trading opportunities.

“In this mixed environment Trafigura delivered a strong performance: profit was USD 887 million (-9%) broadly within the range of profits registered in each of the last five years; gross profit was USD 2,239 million (-2%) and gross margin was 1.6% down from 2.3% recorded in 2016. EBITDA was USD 1,580 million (-3%) below the figure of USD1,628 million recorded in 2016. Revenue increased by 39 percent to USD136,421 million from USD98,098 million, reflecting increased volumes and higher commodity prices” commented Trafigura’s CEO Jeremy Weir, who added.

“In commodity markets that are more competitive and transparent than ever, these results demonstrate the benefits of our scale, our resilient and diversified business model, as well as our ability to generate profit consistently throughout the economic cycle”.

Highlights of the year included significant growth in volumes handled by both trading divisions, Oil and Petroleum Products and Metals and Minerals, reinforcing the company’s position as a top-tier trader across these markets and in all important geographies. The company’s global reach grew establishing a leading position in exporting crude oil and refined products from the US and the doubling of oil and products volumes sold into and out of India over the year.

A good profit performance was reported by all trading books and a near-equal contribution to gross profit by both trading divisions. Metals and Minerals had an exceptionally strong year across the board from non-ferrous concentrates to refined metals and bulk minerals; in Oil and Petroleum Products profit was lower than last year owing to reduced market volatility and margin compression.

“We continued to invest in industrial assets that support access to trading flows. These included investment in the world-class Indian refining and distribution business Essar Oil and through Galena Private Equity Resources Fund into Terrafame, the Finnish nickel, cobalt and zinc producer. During the year we announced support for a large order for oil tankers that will be used, when delivered, to carry Trafigura oil cargoes as well as to generate value. Our company was able to renew and increase its credit facilities at tighter yields and returned to the debt capital markets in a limited way.

For 2018 we see a positive outlook for the markets in which we trade, underpinned by increasing demand, tightening supply and the potential for greater price volatility. As such we believe the need for the marketing, logistics and risk management services we provide can only grow over the coming year” concluded Christophe Salmon, CFO for Trafigura.

 

 

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