By Natalie Grover
LONDON (Reuters) -Commodities trader Trafigura posted a record net profit of about $7.4 billion for the 12 months to the end of September, up 5% from a year earlier, and promised a $5.9 billion dividend to shareholders, while anticipating a slowdown in future earnings.
The impact of an energy price surge last year driven by supply disruption linked to Russia's invasion of Ukraine led to record profits for many companies, but markets have since eased.
The Geneva-based private company's results marked the fourth successive year of record profits. The bulk of its profit - $5.5 billion - was in the first half of the financial year, which doubled profits compared with the 2021-2022 first half.
Its executives said in the company's annual report the company's slower performance in the second half of this year was a better indicator of the result it expects for 2024.
The company more than tripled its dividend payout to about $5.9 billion, up from $1.7 billion in 2022.
As supply chain disruptions eased in the second half of Trafigura's financial year, it said future conditions would be more "normalised" and predicted a reduction in the volatility that for commodities traders can boost earnings.
"We face uncertain times," CEO Jeremy Weir said in a statement. "Low inventories, geopolitical threats, elections in nearly two thirds of the democratic world in 2024 and brittle supply chains mean markets are fragile and vulnerable to spikes driven by sudden changes in supply and demand."
Core earnings before interest, tax, depreciation and amortisation (EBITDA) rose slightly to $12.7 billion, from $12.1 billion a year earlier.
In its 2023 financial year, revenue dropped 23% to $244.3 billion, reflecting lower average commodity prices.
The company's Chief Economist Saad Rahim said in a statement that, although consumer confidence was at multi-year lows, economic growth had been "more robust than expected".
That meant "stronger demand for commodities than prices suggested for most of our financial year," he said.
The volume of oil and products eased to around 6.3 million barrels per day (bpd), from 6.6 million bpd last year and 7 million bpd in 2021.
Some of drop was linked to the ending of the company's Russian oil contracts because of Western sanctions, but volumes have stabilised, Trafigura said.
In its metals and minerals division, which includes bulk commodities, operating profit before depreciation and amortisation came in at about $1.6 billion, down from roughly $1.9 billion a year earlier, after it was hit hard by a major nickel fraud scandal resulting in an impairment of $590 million.
The company is dealing with investigations with regulatory authorities in Brazil, Switzerland and the United States.
It set aside $127 million to cover a possible U.S. Department of Justice (DOJ) fine to end an investigation into "improper payments" by the company in Brazil roughly a decade ago.