Stay informed with free updates
Simply register at Oil and gas industry myFT Digest – Delivered straight to your inbox.
Three of the world's biggest commodities traders said their combined $23 billion in profits last year showed they could continue to grow strongly without turning to public markets.
Jeffrey Dellapina, chief financial officer of Vitol, the world's largest independent oil trader, said there was “no chance” it would ever consider an initial public offering.
“I have a vote, not the deciding vote, but I'm sure I could rally enough people to end any chance of that happening,” he said. Vitol posted an annual profit of $13 billion in 2023, the second year of extraordinary profits after a record profit of $15.1 billion the previous year.
“We are incredibly fortunate in terms of how well the industry has done. The fact is that we do not have a need for capital. So what would be the driver at the end of the day? he added at the Financial Times Commodities Summit in Lausanne.
Most of the world's largest commodities traders, which play a key role in selling and transporting everything from oil and gas to metals and grains around the world, remain in private hands, fueling concerns about transparency of an industry that is the backbone of the world economy. economy.
But since Russia's full-scale invasion of Ukraine, traders have made huge profits from volatility in global markets and say they have never enjoyed such easy access to credit lines from banks and governments.
Vitol, Trafigura and Mercuria posted record aggregate profits of $25.1 billion in 2022. Last year marked the second-highest combined profit they generated.
Guillaume Vermersch, Mercuria's chief financial officer, said private ownership, in which many employees own shares in the company, was “a very powerful tool to attract and retain talent.”
He said there were no limits to the growth of Mercuria, which made an estimated profit of $2.7 billion last year, and added that it was in a different position to Glencore, which went public in 2011 in the company's last major IPO. a commodities trader, making six of his senior partners multimillionaires.
“The Glencore case probably needs to be put back into context. “They were about to make a major, very capital-intensive acquisition, asking for a lot of long-term capital to develop the Xstrata merger,” Vermersch said. “We're not in this industry, so the needs are different.”
In 2010, the year before it went public, Glencore's net profit was $3.8 billion on revenue of $145 billion. Last year, Vitol reported $400 billion in revenue, while Trafigura posted $244 billion in revenue and a record $7.4 billion in profits.
Christophe Salmon, Trafigura's outgoing finance chief, said the industry had evolved from the days when trading houses needed to find cash to pay their major shareholders when they retired or left. “The company has a very diversified shareholder base of 1,200 people. . . compared to the previous generation,” he said.
Salmon added that, in addition to significant support from lending banks, Trafigura had “unlocked” a new source of funding from export credit agencies. “We have raised approximately $5 billion in total medium-term financing,” he said.
In addition to Salmon, two of Trafigura's longest-serving partners, chief executive José María Larroca and former chief operating officer Mike Wainwright, will retire this year.
When asked if Vitol was finding it increasingly difficult to access oil-trade-specific financing as more banks begin to focus on their net-zero commitments, Dellapina had a one-word answer: “No.”
“This is a world that has to empower itself. And I think the banks appreciate it,” he added.
This story has been corrected to reflect that the combined profits generated by Vitol, Trafigura and Mercuria hit a record in 2022, not 2023.
