(Bloomberg) — The world’s largest commodity traders are still making historically elevated profits, even as less-volatile markets mean their earnings have retreated from the bonanza that followed Russia’s full invasion of Ukraine.
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At the FT Commodities Global Summit in Lausanne this week, executives at the largest trading houses and their bankers indicated both on stage and privately that although earnings for 2024 and the first quarter of 2025 would be lower than the boom years of 2022-2023, they remained higher than almost any other time in history.
The trading houses are some of the world’s largest companies measured by annual turnover, but most are privately owned by founders and employees, and many don’t report their results publicly. The industry has enjoyed an enormous windfall since the invasion of Ukraine and the energy crisis that followed it, with combined profits of more than $50 billion in 2022 and 2023 at the four leading privately-owned energy traders — Vitol Group, Trafigura Group, Mercuria Energy Group Ltd. and Gunvor Group.
Commodity traders thrive on volatility and high prices, and both have retreated from the extremes of 2022. But the industry is still benefitting from disruptions to trade flows ranging from tariffs and sanctions to the crisis in the Red Sea, while the biggest players are also beginning to reap the rewards of billions of dollars invested in assets and diversification into new markets, helping to cushion the decline in trading profits.
Vitol’s profit for 2024 was lower than the previous year’s level of $13.2 billion, but not drastically so, according to people briefed on the results, who asked not to be identified because the information is not public.
Trafigura, which saw annual earnings peak above $7 billion in 2022-2023, is on track for net profit for the half year ending in March that’s roughly in line with the past two reporting periods, when it posted half-year profits of $1.5 billion and $1.3 billion, other people familiar with the matter said. The people cautioned that the company’s accounts have not yet been finalized and things could yet change.
At the conference this week, Trafigura Chief Financial Officer Stephan Jansma said that the company’s financial performance had “reached a new cruising altitude.”