Gunvor reports 50% fall in earnings as energy market volatility declines

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Gunvor reported on Tuesday that its earnings had halved in the first six months of 2024, as the energy trader became the latest company in the sector to be hit by an easing of market volatility that had boosted profits after Russia’s full-scale invasion of Ukraine.

Gunvor, controlled by billionaire Torbjörn Törnqvist, said net profits came in at $417mn, which was 50 per cent lower compared with the equivalent period in 2023, but they remained “well above historical profitability levels”.

The sharp fall in profit at the Geneva-based company comes after one of its competitors, Trafigura, reported in June a more than 70 per cent slide in its earnings in the six months to March.

This performance reflected a normalisation of trading conditions after a period of unprecedented profit growth for companies in the industry.

The “outlook for [the] rest of 2024 is [for] tougher trading conditions to continue and outsized profit generation to remain challenging”, Gunvor said in a statement.

Commodity prices have become less volatile despite the conflict in the Middle East between Israel and the Palestinian militant group Hamas.

Brent crude, the international oil benchmark, has averaged $82.93 per barrel this year so far, and was trading at $79.72 on Tuesday. That contrasts with wide ranges in 2022, when it fluctuated between $75.11 and $139.13.

Gunvor said volatility in the European natural gas and liquefied natural gas markets was similarly subdued, with prices down about 30 per cent to 35 per cent compared with the first half of 2023.

Energy markets are currently relatively calm, as concerns about slowing economic growth and weaker oil demand have offset fears of big supply disruptions because of the war in Gaza and attacks on ships in the Red Sea.

In its results in June, Singapore-registered Trafigura said net profits in the six months to the end of March fell to $1.5bn, from $5.5bn in the first half of 2023 and $2.7bn in the same period in 2022.

Gunvor said it increased first-half revenue to $68bn, up from $61bn in the same period in 2023, as higher volumes more than offset lower prices for natural gas and LNG.

Oil and petroleum products were the main drivers of volume growth, while gas was stable.

Gunvor reported lower refining margins because of falling growth in demand for fuels, and “the continued normalisation of the market imbalances” that had been unleashed by Russia’s war in Ukraine.