Gunvor Group Ltd. Chief Executive Officer Torbjörn Törnqvist will plow record profits into buying assets and making other investments that underpin the trading house’s long-term earnings.
(Bloomberg) — Gunvor Group Ltd. Chief Executive Officer Torbjörn Törnqvist will plow record profits into buying assets and making other investments that underpin the trading house’s long-term earnings.
“We have more cash than is necessary for our trading,” Törnqvist said in an interview on the sidelines of the Energy Intelligence Forum. “We are relatively under-invested in long-term assets.”
Flush with cash from a banner year, a cluster of privately owned and little regulated commodity trading giants are increasing their domination of the global trade in resources. It’s a turnaround from early 2022 when Gunvor and other companies were forced to cut trading volumes as energy prices and volatility rose to extreme levels.
This year, Gunvor, co-founed by Törnqvist in 2000, has bought liquefied natural gas tankers, which will be delivered just as a surge in US exports comes to the market. The company could make more investments in shipping, and it’s also focused on securing energy supply contracts through offtake-linked loans or equity stakes, the CEO said.
“Our business in the US is growing, and we have several crude oil offtake agreements in place, built up over the last 2.5 years,” he said.
Renewable energy, particularly in Europe, is another goal, with Gunvor already expanding its gas and power trading team. But equity investments won’t be part of the company’s strategy in metals, where it is hiring traders after a seven-year absence from the market.
“If you’re going to try to be part of the energy transition you need to have an idea about metals,” Törnqvist said. “Are we going to buy mines? No. Could we get some offtakes from mines? Yes.”
Gunvor’s first-half profit of $803 million was only slightly down on last year’s record, an indication that the biggest commodity traders remain in robust health. Full-year earnings are on track to be somewhere between 2021 and 2022 levels, Törnqvist said.
“The baseline is higher because we are bigger, more diversified, with more activities, more contracts, and we have hired a lot of new traders,” he said.
Despite weighing potential mergers and stake sales over the past few years, Törnqvist — whose family owns around 85% of Gunvor — said he’s not going anywhere soon.
“The energy transition fascinates me, so I’m enjoying what I’m doing,” said Törnqvist, whose son Fredrik joined the company’s board this year.
–With assistance from Jack Farchy.
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