(Bloomberg) -- Trafigura Group posted its lowest first-half profit in at least four years as gains at its metals division failed to outweigh much weaker results from oil trading.

Net income fell 53 percent to $222 million in the six months through March, from $471 million a year earlier, Singapore-based Trafigura said in a statement on Wednesday. That’s the lowest since at least 2014 when the third-biggest independent oil trader and second-biggest metals trader started reporting half-year results.

Trafigura blamed the decline on the oil market’s move from a contango structure -- where traders can lock in profits by filling storage tanks with crude and selling futures contracts at higher prices -- to backwardation where future prices are lower than current ones. Other trading houses, including the world’s biggest independent oil trader, Vitol Group, have also suffered amid the market shift, which has led to an unwinding of physical oil storage positions.

“We undertook a substantial restructuring of our trading books, reducing costs by shrinking inventories and radically adjusting our storage commitments,” Trafigura Chief Financial Officer Christophe Salmon said in the statement. That restructuring and increased price volatility in oil, metals and minerals markets should boost second-half results, he said.

Salmon has previously said that Trafigura aims to generate annual net income of about $1 billion per year.

First-half net income was also impacted by a one-time re-measurement of deferred tax assets in the U.S. as a result of the corporate tax reform, Trafigura said.

Trafigura’s profit decline came despite record oil-trading volumes of 5.8 million barrels a day during the period. The largest commodity traders are boosting volumes to offset falling profit margins. Trafigura said its gross profit margin fell to 1.13 percent from 1.84 percent a year earlier. Gross profit in oil and petroleum trading skidded 54 percent to $299 million.

Metals and minerals volumes increased by 48 percent, with gross profit at the division climbing 16 percent to $680 million.

Overall gross profit fell 21 percent to $979 million. Trafigura’s earnings before interest, taxes, depreciation and amortization, dropped by 29 percent to $658 million.

Revenue, which is largely a reflection of commodity prices, climbed by 29 percent to almost $87 billion. Oil and petroleum product trading accounted for 69 percent of that revenue, with metals and minerals the rest.

(Updates with chart showing annual net income.)

To contact the reporter on this story: Andy Hoffman in Geneva at ahoffman31@bloomberg.net

To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Dylan Griffiths, Nicholas Larkin

©2018 Bloomberg L.P.

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