By Julia Payne and Robert Harvey
LONDON (Reuters) - Global commodity trading house Trafigura saw a sharp drop in its earnings for 2024 and has revised down its equity and profits for previous years after it discovered a billion-dollar oil fraud in Mongolia, the company said on Friday.
Earnings dropped by 60% on the year in 2024 to $2.8 billion, the lowest since 2020. Trafigura's financial year ends on Sept. 30.
The lower result marks the end of a period of exceptional earnings. During the last four years, commodity traders cashed in on unprecedented market volatility generated by the COVID-19 pandemic, Europe's energy crisis and Russia's fullscale invasion of Ukraine.
As its earnings fall, the Geneva-based firm faces possible fines as a result of a corruption trial in Switzerland, as well as equity buybacks from departing senior managers, and an imminent CEO changeover.
The company paid $2 billion in dividends in 2024 compared to nearly $6 billion in 2023.
The Geneva-based firm said it recorded a $358 million impairment for its Mongolian business in 2024 "with the balance recorded as prior period adjustments".
Trafigura attributed the majority of the total to debts owed by its counterparty in the country, Lex Oil, but its own internal investigation is ongoing to try to locate around $500 million. The Mongolia fraud is the second such loss in two years after the firm wrote off $600 million in connection with a nickel deal it said was fraudulent.
Trafigura's zinc and lead producer Nyrstar (EBR:NYR) also led to a significant impairment of nearly $300 million in 2024.
The $1.1 billion loss in Mongolia was accrued over five years. Trafigura revised its 2022 and 2023 earnings and group equity to reflect the Mongolia loss. 2022 was revised to $6.8 billion compared with $7 billion and 2023 was revised down to $7.3 billion from $7.4 billion, the results showed.
Group equity fell slightly to $16.3 billion after 2023 was revised down to $15.8 billion from $16.5 billion.
EBITDA fell 36% to $8.1 billion. Trafigura's traded oil and fuel volumes were up at 6.8 million barrels per day (bpd), compared with 6.3 million bpd in 2023.
Trafigura has not set aside any provision to cover possible penalties linked to an ongoing corruption trial in Switzerland, where prosecutors are seeking a total of $156 million from the trading house over its Angolan activities.
Trafigura's 2024 financial year will be the last with CEO Jeremy Weir at the helm. He steps down in January to be replaced by gas, power and renewables boss Richard Holtum. Weir, who was CEO for over 10 years, will become chairman of the board.