TRAFIGURA Group warned that market volatility may not translate to opportunities for its traders, as the commodity giant reported first-half results that showed its dividend payments exceeded net profit.
US President Donald Trump’s trade war in the last couple of months has ignited sharp price swings and market dislocations — typically conditions that commodity traders thrive on.
Trafigura said it expects volatility to continue over the remainder of 2025, but cautioned that it may not flow through to earnings.
“Given geopolitical uncertainty, we anticipate further market turbulence in the second half of the year,” chief financial officer Stephan Jansma said in the report. “It is important to note that increased volatility may not necessarily translate into physical trading opportunities, as current market movements are driven more by policy-focused decisions rather than traditional supply-demand disruptions.”
Trafigura reported net profit of US$1.52 billion in the six months through March, up 2.8 per cent from a year earlier. The dividend payment of US$1.54 billion was a 136 per cent increase on the dividend for the first half of the previous year, and compares to dividends of US$2.02 billion paid in the full year to September 2024.
The financial report is the first under new chief executive officer Richard Holtum, who replaced Jeremy Weir at the start of the year. He takes over a company still wading through the fallout from two major alleged frauds against its business in recent years.
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Profit levels remain historically strong, but have retreated from the peaks seen in the bonanza period of 2022-2023, leaving the company facing a balancing act to manage its share buyback obligations.
Trafigura pays dividends to its holding company, which are used to buy back shares from the roughly 1,400 employees who own it — the company’s key way of rewarding its senior staff. The departure of many top executives from the trading house in the past couple of years has left it with a hefty bill for buying back their shares.
That has created a tension for the trading house: if it pays out more to shareholders than it earns in profit, its equity will fall, forcing the company either to take on more leverage or to reduce its activities. Alternatively, it can defer some of the planned payments, reducing the income of its own current and former senior staff.
Trafigura has already deferred some buyback payments that were due this year, Bloomberg has reported.
The dividend payment in the half year to March meant that its group equity dropped to US$16.2 billion, down slightly from US$16.3 billion at the end of September, although it remains well above the company’s minimum target of US$15 billion, meaning it has a cushion with which to supplement payouts.
Holtum said that all three trading divisions had “performed well,” while Jansma noted that Trafigura’s copper, zinc and lead trading books were highlights, along with crude, middle distillates and freight.
The copper market has been roiled in recent months as traders rushed to ship metal to the US after Trump indicated he planned to impose import tariffs. Trafigura is the biggest copper trader.
Trafigura said that its traded volume of bulk minerals dropped 21 per cent from a year earlier as it decided “to focus on higher-value business.” Non-ferrous metals volumes dropped 4.8 per cent, while oil and gas trading volumes were flat.
Trafigura’s main focus during the half year was “very much to improve our operational efficiency in our policies and procedures,” Jansma said. The company last year shocked its lenders and competitors by revealing US$1.1 billion losses in Mongolia after discovering what it said was “serious misconduct” by its own employees.
The company said it had bought a “strategic investment” in Cogentrix Energy — its first public acknowledgment of involvement in a US$3 billion deal for a company that runs 5.3 gigawatts of gas power plants in the US.
Terms were not disclosed, but Trafigura said the deal was the main reason why the value of its unlisted equity holdings rose from US$197 million to US$467 million over the half year.
In other changes, the total carrying amount for underperforming loans and other receivables rose from US$377 million to US$676 million.
A Trafigura spokesperson said that the increase “was caused by a reclassification of certain loans, which do not require an increase in our expected credit loss provision because of risk mitigation factors.” BLOOMBERG
