Gunvor, one of the world’s biggest oil traders, has reported record profits for 2015, boosted and favourable market conditions caused by the oil price crash.
The company, based in Geneva, said net income rose to $1.25bn in the year to December, , after banking a large profit from the sale of a majority stake in its once-prized Russian oil terminal, Ust-Luga.
Volumes of oil trade increased 24 per cent to 180m tonnes as Gunvor moved to take advantage of increased arbitrage, storage and other trading opportunities in the market.
“We’ve seen an increase in volumes, an increase in earnings from trading, and continued geographic diversification,” said Torbjörn Törnqvist, Gunvor’s chief executive and majority shareholder. “We’re very well positioned to operate in current market conditions.”
Stripping out the impact of disposals and impairment charges on coal assets, Gunvor said underlying earnings rose 14 per cent to $860m.
Revenues, which are highly sensitive to movements in oil prices, were $64bn — down from $88bn. Brent crude averaged roughly $50 a barrel last year compared with closer to $100 between 2011 and 2014.
Gunvor and other large oil traders such as Vitol, Trafigura and Glencore have as spot prices have fallen below oil for future delivery, a market structure known as contango. Companies with oil storage can buy up excess crude and sell it forward in the futures market for higher prices.
Gunvor’s three European refineries have also prospered, as lower prices at the pumps stimulated demand for products such as gasoline from motorists.
The record year came as Gunvor continued to refocus its business. The company , where it once had a market-leading position, handling about one-third of the country’s seaborne exports and reinvesting the proceeds.
It recently completed a deal to in Rotterdam from Kuwait’s national oil company.
Gunvor’s retreat from Russia came after the US in 2014 imposed sanctions on , its Russian co-founder, for his alleged ties to President Vladimir Putin. has always strongly denied any links to the Kremlin or Mr Putin.
Mr Timchenko sold his 43 per cent stake in Gunvor to Mr Törnqvist the day before US sanctions were announced in March 2014, allowing the company the two men founded in 2000 to continue trading.
Speaking to the Financial Times on Tuesday, Gunvor’s chief financial officer Jacques Erni said the company had enjoyed a strong start to 2016.
“The structure of the oil market is still good,” he said. “The first quarter has been a good one.”
Mr Erni confirmed that Gunvor had paid a dividend to Mr Törnqvist, its biggest shareholder, but declined to give a figure. Mr Törnqvist’s stake fell to 78 per cent during 2015 from 88 per cent because of an employee share purchase programme and bonuses paid in stock.
Between 2000 and 2014 Gunvor has paid $780m of dividends, reinvesting the rest of earnings in expanding trading desks or buying industrial assets, including an ill-fated acquisition of US coal mines that have since been written down.
In a speech last year, Mr Törnqvist said Gunvor had paid the price for making investments based on “a bullish, but flawed” consensus for coal a few years back.
In contrast, he said, some of its most profitable investments have been either in the “doomed” European refining sector, or in other instances where, frankly, our market intelligence was better than that suggested by the consensus.”
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