Trafigura triples payouts to staff to record $5.9bn

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Commodity trader Trafigura will pay out a record dividend of $5.9bn to the company’s 1,200 shareholders after reporting its highest-ever net profit, but flagged a significant slowdown in the second half of the year as the energy crisis abated.

The privately held group’s bumper payout to executives and traders was more than triple the $1.7bn handed out last year and takes total payments since 2020 to more than $9bn, capping one of the most profitable periods in the commodity trading sector’s history.

The dividend averages about $5mn per shareholder, although some will receive much more, and comes after Trafigura reported record net profits for 2023 of $7.4bn, even higher than the $7bn it made in 2022.

Founded by its former French chief executive Claude Dauphin in 1993, Trafigura has evolved from a scrappy, secretive trader to one of the world’s most important commodity companies, with business in 150 countries and assets ranging from mines and ports to energy infrastructure.

In its 30-year history, the company has periodically been dogged by allegations of corrupt dealings.

The 2023 accounts included a one-off provision of $123mn to resolve an investigation by the US Department of Justice over past “improper payments” in Brazil. Trafigura first disclosed the amount on Wednesday when Swiss prosecutors charged the company with bribing foreign officials in Angola between 2009 and 2011 in a separate but related case.

Chief executive Jeremy Weir said the probes relating to historic bribery did not reflect the way Trafigura does business now. “What is disappointing is that the company has changed a lot over the years and it is no reflection of the organisation that it is today.”

Trafigura made net profits of $1.9bn in the second half of its financial year, which runs until the end of September.

That followed earnings of $5.5bn between October 2022 and March 2023, which covered more of the peak of the energy crisis triggered by the disruption of oil and gas supplies following Russia’s invasion of Ukraine.

Overall gross profit margins were 5.2 per cent, up from 3.8 per cent in 2022.

“We see the performance of the group in the second half of the 2023 financial year as more representative of the result that can be expected in 2024,” said Trafigura’s chief financial officer Christophe Salmon.

“We expect margins to return to more customary levels in 2024, should market conditions continue to normalise,” although Trafigura said markets remained “fragile”.

The commodity trading sector has enjoyed a huge increase in profits since 2020 when the coronavirus pandemic first disrupted global supply chains and stoked volatility in energy and metals prices.

Trafigura’s total group equity has more than doubled in the past four years, rising to $16.5bn from $6.8bn in 2019, with roughly half of the company’s returns retained within the group while the rest has been paid out in dividends.

The bumper profits for the 2023 financial year were driven by Trafigura’s energy traders, who made earnings before interest, taxes, depreciation and amortisation of $11.1bn, dwarfing the $1.6bn recorded by its metals, minerals and bulk commodities division.

The metals business has been weighed down by a charge of $578mn related to an alleged nickel fraud that Trafigura has blamed on Indian businessman Prateek Gupta, who in turn has accused the trading group of being involved in the scheme, which it denies.

The energy trading division, which includes oil and petroleum products, as well as gas, power and renewables, was the principal beneficiary of the price volatility precipitated by the war in Ukraine.

Weir highlighted Trafigura’s gas and power activities, which are focused on the US and Europe, and have emerged as the third pillar for the company, alongside oil trading and metals and bulk commodities. “It complements the other parts of our business so we understand the energy stack very very well,” he said.

Trafigura’s effective corporate tax rate fell from 12 per cent in 2022 to 8 per cent in 2023. The company said this was due to the recognition of some historic tax losses and higher earnings in lower tax jurisdictions.

Trafigura is registered in Singapore, but the bulk of its staff, including its chief executive, are based in Switzerland.