Mercuria earnings rise 10% as cost cuts offset slip in volumes

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Mercuria, one of the world’s top commodity traders, recorded a 10 per cent increase in earnings last year helped by favourable market conditions and a sharp reduction in costs.

The Geneva-based group, which trades more than 2.5m barrels a day of oil, posted net income of $302m, up from $275m a year, write Neil Hume and David Sheppard. Total volumes across all commodities including gas, metals and coal, as well as crude and refined products, totaled 322m tonnes of oil equivalent, the company said.

“For Mercuria 2016 has been robust and prudent”, the company’s chief financial officer Guillaume Vermersch told the Financial Times.

Mr Vermersch, who is attending the FT’s Commodities Global Summit in Lausanne, said the results including the costs of a settlement with Citi, the US investment bank, over a $270m metals financing dispute in China.

Mercuria has cut its overheads by aound 25 per cent over the year as it completed the integration of physical trading assets bought from JPMorgan, Mr Vermersch said, and introduced new technology platforms across its business.

Mr Vermersch said ChemChina, which bought a 12 per cent stake in Mercuria early last year, had helped the company grow its business in China and would not rule out selling a further stake up to 20 per cent.

“The two groups have become closer at every level,” he said, adding that business with its Chinese partner was set to “take off” in 2017.

Gross revenues, which are heavily influenced by moves in commodity prices, were $91bn in 2016 said Mr Vermersch, with total volumes declining slightly.

He said the company was confident of recovering some of the money lost in the metals warehousing scandal at the port of Qingdao in which Mercuria and Citi became embroiled in 2014, resulting in a long-running legal dispute.

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