Trafigura Reports Significant Earnings Decline Due to Fraud

By Julia Payne and Robert Harvey
LONDON (Reuters) – Global commodity trading house Trafigura experienced a sharp decline in its earnings for 2024 and revised down its equity and profits for previous years after discovering a billion-dollar oil fraud in Mongolia, the company announced on Friday.

Earnings fell by 60% year-on-year in 2024 to $2.8 billion, marking the lowest earnings since 2020. Trafigura's financial year concludes on September 30.

This decline indicates the end of a period characterized by exceptional earnings. Over the past four years, commodity traders benefited from unprecedented market volatility triggered by the COVID-19 pandemic, Europe's energy crisis, and Russia's full-scale invasion of Ukraine.

As earnings decrease, the Geneva-based firm faces potential fines due to an ongoing corruption trial in Switzerland, equity buybacks from leaving senior managers, and a pending CEO transition.

In 2024, the company distributed $2 billion in dividends compared to nearly $6 billion in 2023.

Trafigura reported a $358 million impairment for its Mongolian operations in 2024, stating that the majority of this loss was due to debts owed by its counterparty in the region, Lex Oil. The firm is conducting an internal investigation to locate approximately $500 million related to the fraud. This incident marks the second significant loss within two years, following a $600 million write-off associated with a fraudulent nickel deal.

Additionally, Trafigura faced a nearly $300 million impairment from its zinc and lead producer, Nyrstar (EBR:NYR), in 2024.

The $1.1 billion loss in Mongolia accumulated over five years. Trafigura revised its 2022 and 2023 earnings and group equity to account for this loss. The 2022 earnings were adjusted to $6.8 billion (down from $7 billion) and 2023 earnings revised to $7.3 billion (previously $7.4 billion).

Group equity decreased slightly to $16.3 billion after 2023 was adjusted down to $15.8 billion (from $16.5 billion).

EBITDA fell 36% to $8.1 billion. However, Trafigura's traded oil and fuel volumes increased to 6.8 million barrels per day (bpd), up from 6.3 million bpd in 2023.

Trafigura has not earmarked any provisions for potential penalties related to the ongoing corruption trial in Switzerland, where prosecutors are pursuing $156 million from the trading house concerning its Angolan operations.

2024 will be the last financial year with CEO Jeremy Weir in charge, as he is set to retire in January 2025, with Richard Holtum, who oversees gas, power, and renewables, taking over. Weir, who held the CEO position for over 10 years, will transition to become chairman of the board.