Trafigura Traders Enjoy 247% Share Price Gain After Record Year

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(Bloomberg) — The price of shares in Trafigura Group held by its top employees surged 247% in its last financial year, as the trading house benefited from commodity market volatility to post a record profit.

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Executives at Trafigura were informed of the share-price gain after its financial year closed at the end of September, according to people familiar with the matter, who asked not to be identified as the figures are private. The company is due to report its annual results next week.

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The spectacular increase represents a boon for the roughly 1,000 top employees who are shareholders, as the war in Ukraine and soaring commodity prices thrust trading houses to the forefront of a global race for commodity security. It stands in contrast to the sell-off in public equity markets, as well as the big writedowns being taken by private equity investors in previously hot sectors like tech and crypto.

The surge in value is also an indication that Trafigura had yet another stellar year. Profit at the company, which is among the world’s largest oil, gas and metals traders, climbed to a record over the period, people familiar with the matter said.

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Trafigura declined to comment on the gain in the price of the preference shares and the company’s results.

“Over the last year, the service we provide to supply commodities and energy to customers has become more complex and is more critical than ever before,” a spokesperson said in a statement.

Wild swings in prices and supply chain disruptions arising from the Covid-19 pandemic and Russia’s invasion of Ukraine are providing opportunities for trading houses. Trafigura delivered net profit of $2.7 billion in the first half of 2022 — almost matching the total for the previous year. Cargill Inc., Vitol Group and Glencore Plc are making more money than ever before.

The buybacks also showcase how the gains of the current commodities boom are being shared out between a relatively small group of traders and executives who own many of the industry’s major players. Last year, rival energy trader Vitol paid $3 billion through share buybacks to the roughly 450 of its senior staff.

About 1,000 traders and executives at Trafigura have a stake in the company through preference shares in holding company Trafigura Beheer BV. Each year the company buys back some shares from its employees, as one of its key ways of remunerating top staff.

The war in Ukraine has also raised the profile of trading houses as strategic suppliers of key resources. In October, Trafigura reached a deal to supply half a million tons of non-Russian base metals to Germany, with the German government backstopping an $800 million credit deal in return.

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