London — Trafigura expects another strong trading performance in its financial year that began on Oct. 1 and one of the global commodities trader’s main aims will be to make newly acquired zinc firm Nyrstar profitable, the chief financial officer said.
Despite stellar trading figures in the year that ended on Sept. 30, particularly from its oil business, Trafigura still reported its lowest annual net profit in almost a decade after a string of losses in its physical asset portfolio.
“We’ve had probably our strongest start to our financial year from a trading perspective, with a special mention to oil again,” Christophe Salmon said of the outlook to the new year.
“If I had to mention one example it’s freight and chartering. There’s a lot going on with the IMO change and other external events,” he told Reuters after the firm published results for its 2019 financial year.
New International Maritime Organization (IMO) rules, referred to as IMO 2020, aim to stop ships from using fuels containing more than 0.5% sulphur unless they are equipped with exhaust-cleaning systems known as scrubbers.
Last year, Trafigura’s stellar 2019 trading results were bogged down by losses in some of its related firms, such as its Belgium-based zinc producer Nyrstar.
“The big task for us in 2020 is to make sure that we deliver on the turnaround of Nyrstar,” he said, after Trafigura took control of the firm in July at the end of a restructuring.
Salmon said the firm’s decision to lower its 2019 dividends followed talks with staff, partners and banks. He said it aimed to boost equity and reduce its adjusted debt to equity ratio.
The firm redeemed a perpetual bond in February and issued a fresh one for Nyrstar to boost the company’s equity.
Its downstream and retail arm Puma Energy posted significant losses but was being overhauled by a new chief executive, who has said he plans for divestments and deleveraging the company.
“I would not put Puma in the category as a positive contributor next year. If they do well, they will be back to flat profitability,” Salmon said, adding Puma’s Australian unit, which has been a drag on the firm, was expected to be sold in the next two months.
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