Trafigura books $287 mn impairment charge on stake in refiner Nayara Energy

By Reuters

  • 11 Jun 2020
Credit: Thinkstock

Trafigura recorded its highest first half net profit since 2016, despite $580 million in impairments, as its oil and metals trading divisions thrived in the extreme volatility caused by Middle East events and COVID-19, the company said on Thursday.

The Geneva-based trading house posted a 27% year-on-year rise in net profit to $542 million for the six months to March 31. New IFRS 16 accounting rules, however, reduced the total by $31 million.

Trafigura's total earnings before interest, tax, depreciation and amortisation (EBITDA) hit a record $2.41 billion for the period. Without the accounting change, EBITDA would have been $1.93 billion, up from $1.1 billion in the first half of 2019.

"The (COVID-19) crisis deeply impacted overall growth in the global economy and demand in the commodities we trade. This disruption in market conditions creates volatility on which Trafigura managed to thrive," CFO Christophe Salmon said in an accompanying video.

Revenues fell in line with commodity prices to $83 billion compared with $86 billion a year ago.

Salmon highlighted a strong start for the group's TFG marine bunkering business and the turnaround of the formerly near-bankrupt Nyrstar zinc smelting division, in which Trafigura increased its stake to become the majority owner last year.

"Nystar is a positive contributor to gross profit and EBITDA but it is still a loss-making business," he added.

Trafigura recorded a $287 million impairment in the value of its stake in Indian refiner Nayara Energy as the COVID-19 pandemic hit fuel demand and sent refining margins to record lows. It also reduced the value of its majority stake in loss-making retail and logistics company Puma Energy by $293 million to $1.45 billion.

Trafigura will increase its stake in Puma to ease some financing obstacles by buying part of an former Angolan general's interest.

Looking forward, Salmon said the new renewables and power division would become the third pillar of revenue generation.