GLENCORE : Trafigura's Half-Year Profit Fell 22% on Reduced Crude Volatility

By Sarah McFarlane

Oil trader Trafigura Group's half-year profit fell sharply on less volatile oil prices, despite a rise in traded volumes.

The privately held company reported a 22% fall in profit to $471 million in the six months ended March 31 from the same period the previous fiscal year.

Oil trading volumes rose during the period, putting the firm on course to exceed 5 million barrels a day in 2017, up from 4.3 million barrels the previous year, Trafigura said.

Trafigura is the third largest oil trader behind Vitol Group and Glencore PLC. Tightening margins have led the three companies to increase the amount of oil they trade to generate profits, growing their market share to the detriment of smaller companies.

Trafigura said its gross profit margin fell to 1.8% from 2.7% in the previous fiscal half-year. Oil prices were stuck within a particularly tight range in January and February which limited trading opportunities.

"We can generate profit whatever the market circumstances, whether it's a flat market or volatile market, but obviously the quantum of the profitability is higher if the market is volatile," said Christophe Salmon, Trafigura's chief financial officer.

The oil market was much more volatile in May which would benefit the company's second-half results, Mr. Salmon said.

The results showed a rebalancing of the respective contributions of oil and metals to Trafigura's gross profit, with oil now representing around 55%, down from two-thirds in the first half of the previous fiscal year partly through the improved performance of the firm's metals business.

-Write to Sarah McFarlane at [email protected]