Trafigura, a global commodity trading giant, has reported a substantial decrease in its earnings for 2024 and has revised its equity and profits for prior years after uncovering a billion-dollar oil fraud in Mongolia.
Key Highlights:
Earnings Decline:
Trafigura’s earnings plummeted by 60% in 2024, totaling $2.8 billion, marking the lowest earnings since 2020.
This drop signifies the end of a lucrative period fueled by market volatility from the COVID-19 pandemic, Europe’s energy crisis, and geopolitical tensions.
Financial Adjustments:
The company recorded a $358 million impairment related to its Mongolian operations, with further adjustments made for prior periods.
Most of this impairment is attributed to debts from Lex Oil, a counterparty in Mongolia, while Trafigura is actively investigating the loss of approximately $500 million.
Historical Context:
The Mongolian fraud marks Trafigura’s second significant loss in two years, following a $600 million write-off linked to a fraudulent nickel deal.
The cumulative loss in Mongolia over five years amounts to $1.1 billion.
Revised Financials:
Trafigura has adjusted its earnings for 2022 to $6.8 billion (from $7 billion) and for 2023 to $7.3 billion (from $7.4 billion).
Group equity decreased slightly to $16.3 billion, with 2023 revised down to $15.8 billion (from $16.5 billion).
Other Financial Metrics:
EBITDA fell by 36% to $8.1 billion.
Traded oil and fuel volumes increased to 6.8 million barrels per day (bpd), up from 6.3 million bpd in 2023.
Ongoing Legal Issues:
Trafigura faces potential fines related to a corruption trial in Switzerland, with prosecutors seeking $156 million linked to the company’s activities in Angola.
No provisions have been made for these potential penalties.
Leadership Changes:
CEO Jeremy Weir will step down in January after over a decade in the role, transitioning to chairman of the board. He will be succeeded by Richard Holtum, currently overseeing gas, power, and renewables.