Trafigura pays £1.4bn Ukraine war windfall after profits more than doubled amid market volatility
Trafigura’s top traders have shared in a £1.4billion windfall after its profits more than doubled thanks to market volatility sparked by the Ukraine war.
The payout pot, distributed to more than 1,100 senior employees who are shareholders, is up from £895million a year ago. It would mean each receiving an average £1.28million.
Swiss-based Trafigura moves raw materials around the world and its services have been in great demand amid turbulence in energy markets caused by Russia’s invasion of Ukraine.
Boom time: Trafigura moves raw materials around the world and its services have been in great demand amid turbulence in energy markets caused by Russia’s invasion of Ukraine
Its net profit of £5.7billion for the year to the end of September was more than double the £2.5billion reported in 2021 and the third year in a row of record profits. Revenues jumped almost 40 per cent to £261billion.
Chief executive Jeremy Weir said: ‘Europe’s energy crisis and the war in Ukraine underscored the fragility of global supply chains and why security of supply is vital in a world of increasing geopolitical uncertainty.
‘Our oil and petroleum products teams performed exceptionally well, adapting quickly to changing trade flows and identifying supply bottlenecks.
‘In particular in liquefied natural gas (LNG)… we navigated policy, price volatility, market liquidity and increasingly complex logistics to deliver a larger number of cargoes to Europe to help offset the decline in Russian gas flows.’
Trafigura recently signed a £2.5billion deal to supply Germany with LNG, a form of the fuel that is super-cooled to enable it to be shipped in tankers in liquid form over long distances.
Demand for it has surged in Europe because the route for importing gas, via pipeline from Russia, has been choked off by the Kremlin.
Trafigura said that it ‘unconditionally condemned the war’, terminating long-term contracts with Russian state-owned firms and selling its 10 per cent stake in Russia’s Vostok Oil.
Weir said: ‘Against a complex and fast-changing backdrop, we had to deliver exceptional levels of service to our customers, who were also forced to adapt to changing trade flows, the impact of rising raw material prices and broader inflationary pressures.’
He said the crisis showed that the business ‘has not only become more complex but also more critical and in demand than ever before’.
Trafigura’s profits surged even though traded oil volumes fell from 7m barrels per day to 6.6m.
Weir warned markets could be disrupted by further upheaval in the year ahead.
‘Whilst the new financial year has started well, we need to remain focused and vigilant in a period that is likely to be at least as challenging as 2022, with further market turbulence as the war in Ukraine continues and central banks lift interest rates to try and quell inflation,’ he said.