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Three of the world’s biggest commodity traders said their combined profits of $23 billion last year show they can continue to grow strongly without relying on public markets.
Jeffrey Delapina, chief financial officer of Vitol, the world’s largest independent oil trader, said there was “no chance” the company would consider an initial public offering.
“I have a vote, not a deciding vote, but I’m confident we can rally enough people to defeat the possibility of something like that happening,” he said. Vitol posted annual profits of $13 billion in his 2023, his second bumper year of profits, following his record $15.1 billion profit the previous year.
“We’re incredibly lucky in terms of the performance of our industry. The fact is, we don’t need capital. So at the end of the day, who are the drivers?” added at the FT’s Commodities Summit in Lausanne.
Most of the world’s biggest commodity traders, who play a key role in selling and transporting everything from oil and gas to metals and grains around the world, remain privately owned and are the backbone of the global economy. There are growing concerns about transparency in the industry. economy.
But since Russia’s full-scale invasion of Ukraine, traders say they have profited hugely from fluctuations in global markets and have never enjoyed such easy access to credit facilities from banks and governments. There is.
Vitol, Trafigura and Mercuria posted record profits totaling $25.1 billion in 2022. Last year, he recorded the second highest total profit generated by these companies.
Guillaume Vermersch, Mercuria’s head of finance, said private ownership, where many employees own shares in the company, is “a very powerful tool for attracting and retaining talent.”
He said there was no constraint on the growth of Mercuria, which made an estimated $2.7 billion in profits last year, adding that it was in a different position than Glencore, which went public in 2011 as the commodity trader’s last big IPO. Six of the senior partners became millionaires.
“The Glencore incident probably needs to be put back into context. They are moving into large acquisitions that are very capital-intensive, and they are looking for significant long-term capital to develop the Xstrata merger. ,” Vermarsch said. “We’re not in this industry, so our needs are different.”
In 2010, the year before going public, Glencore’s net income was $3.8 billion on sales of $145 billion. Last year, Vitol reported his $400 billion in revenue, and Trafigura recorded his $244 billion in revenue and his $7.4 billion profit, a record high.
Christophe Salmon, outgoing head of finance at Trafigura, said the industry had evolved from the days when trading companies needed to set aside cash to pay major shareholders when they retired or left the company. . “We have a very diverse shareholding base of 1,200 shares…compared to previous generations,” he said.
Salmon added that in addition to significant support from financial banks, Trafigura has “unlocked” new sources of funding from export credit agencies. “We have raised a total of approximately $5 billion in medium-term funding,” he said.
In addition to Salmon, two of Trafigura’s longest-serving partners, executive director Jose Maria Larroca and former chief operating officer Mike Wainwright, are retiring this year.
When asked if Vitol might find it difficult to obtain financing specifically for oil trading as more banks begin to focus on net-zero commitments, Delapina simply answered, “No.” I answered.
“This is a self-reliant world. And I think banks appreciate that, too,” he added.
This article has been corrected to reflect that the combined profits generated by Vitol, Trafigura, and Mercuria reached their record in 2022, not 2023.
