Mercuria’s First-Half Profit Jumped 88% on Commodity Shocks

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(Bloomberg) — Mercuria Energy Group enjoyed an 88% jump in first-half profit, putting it on track for one of its best-ever annual results as the Hormuz crisis creates huge opportunities for commodity traders.

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The results, which Mercuria does not report publicly, are the latest example of how commodity traders are again making huge profits from the natural resource supply shocks hitting the world from oil and gas to metals.

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Mercuria didn’t pay a dividend over the six months through March, instead allowing its equity base to grow, according to people familiar with the unaudited management accounts. The decision marks a shift from recent years, when Mercuria paid out billions in dividends to shareholders led by its co-founders Daniel Jaeggi and Marco Dunand following a period of record profitability across the industry in 2022-2023.

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The trading house has been on an expansion drive in recent months, rapidly growing its volumes of physical commodities and investing in processing assets. 

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Mercuria has embarked on a spree of prepayment deals in metals, including $1.2 billion to help finance the buyout of a copper mining company in Kazakhstan. It’s just sealed a deal to buy an oil refinery and petrol stations in Argentina and secured several agreements to purchase bulk commodities from Venezuela.

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The value of advances and loans on its balance sheet grew by 75% to $5.09 billion during the first half of its financial year.

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A spokesperson for Mercuria declined to comment.

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Though the results only capture one month of volatility related to the conflict between the US, Israel and Iran, war in the Middle East has created opportunities for traders who buy, sell and store products where the region is a key exporter — particularly oil but also aluminum and liquefied natural gas.

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An arbitrage to move copper to the US has continued to create profit opportunities for metals traders in recent months, while a brutal freeze rocked power and gas markets in January.

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Last week, Trafigura Group reported that it made over $4 billion in its first half to March. 

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At a conference in April, Mercuria CEO Dunand said his company was on track to make a return on equity at the upper end of a historic 25% to 50% range, implying profits of $2.3 billion to $3.2 billion.

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Mercuria made net profit of $1.09 billion during the first half of its financial year to March. That’s the second-best first-half result in the company’s history, one of the people said. The group’s equity rose to $7.13 billion at the end of March, from $6.04 billion at the end of September. It reported taxation of $226 million.

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