Performance & risk management
Mercuria has diversified its business to trading in a wide spectrum of commodity products including crude oil, refined oil products, petrochemicals, natural gas, LNG, power, dry bulk, carbon emissions, freight, base metals, concentrates and soft commodities. The Group employs more than 1000 people and is privately owned by its founding shareholders, a group of senior employees, and a significant investment by ChemChina.
Mercuria is one of the largest energy traders in the world. The Group had a successful year in 2020, when we sold the equivalent or 4,110 TWh - and our global revenues reached USD85 billion.
Our financial performance shows a low correlation with the commodity cycle. Despite recent macro-economic events and geopolitical turmoil, our business model continues to prove its wisdom, and Mercuria has been able consistently to capture profitable opportunities. Moreover, Mercuria has been profitable in every consecutive quarter since its founding in 2004.
Solid, unlevered asset portfolio
In addition to our sound equity base, Mercuria has an attractive portfolio of fixed assets ranging from upstream to essential business infrastructure. Storage and logistics assets enable Mercuria to create or enhance trading opportunities. A summary of material acquisitions and investments held by the Group can be found in the Assets Section of the website.
Mercuria manages market, financial and operational risks associated with transporting commodities in significant volumes around the world.
We aim to manage risks soundly across the spectrum. We continue to invest in our infrastructure through strategic Energy Trading & Risk Management (ETRM) systems. Our corporate culture stresses the values of accountability, responsibility and communication at all levels of the organization, and the people of Mercuria take those values seriously.
Risk management functions are rigorously separated and independent from front office. Risks are reported to the highest level of the company management. We employ a wide range of techniques and metrics at corporate, portfolio or trading level, and our robust control process covers the entire life cycle of risk from inception to settlement.
We believe that daily marking to Fair Market Value of all positions held in the company is vital to understanding and stating our risk.
Credit risk is assiduously managed by our Credit Department, providing a vital link between corporate risk management functions and the front office trading units. The department provides necessary checks and balances to facilitate new trading opportunities while also mitigating our ongoing counterparty, sector and country credit risks.
Use of Value at Risk
VaR is a widely used tool for monitoring risk in our industry. We use it to measure, manage and allocate risk across our business. Individual sub-limits are set and enforced by senior management. VaR is only one of a series of tools available, that typically include, position limits, market depth, concentration and liquidity considerations, as well as stress and worst case scenario metrics.
Operational Risk Management
We pay extraordinary attention to detail in ensuring the operational suitability of the vessels, barges, trailers and wagons that we use to transport commodities. Shipping, cargo management, loading and unloading is overseen by dedicated experts together with independent inspection companies. Products in storage and the storage assets themselves are continuously monitored.
We aim to consistently reach the highest standards with regard to our safety, health, environment and quality (SHEQ) activities, and maintain these standards wherever we operate.
Diversified and resilient business model
A message from our CFO
Mercuria’s diversified and resilient business model based on global physical and financial trading, structured finance and assets related solutions allows the group to report another year of financial performance and record gross profit above USD1 billion in 2020.
Mercuria has become the global energy, and metals commodities partner to the producers, financial institutions, governments and regulators, seeking transparent, innovative and compliant services and solutions along the commodities value and supply chain. Our talent base, risk management expertise, financial and capital capabilities are consistently deployed to support our business partners in their journey through the energy transition.
In a generally low margin market environment, Mercuria continuously favors and develops efficient solutions to optimize value and return for our counterparties. We continue to build up our structured finance franchise and we invest in technologies that help lower the costs and improve the security of transactions.
Now more than ever, Mercuria is positioned to continue to grow and seize upon growth opportunities across its natural markets of Asia, Europe, the Americas and around the world.
Mercuria's Group CFO Guillaume Vermersch
The Group successfully diversified the range of its traded products.
Strong gross revenues history
Revenues consistent with market conditions.
Consistent growth of traded volumes
The Group is a major energy trader.
Towards cleaner fuels
The energy mix of the Group’s activities moves towards non-oil products.
Diversified activities and performance
We maintain a balanced portfolio of activities across all regions.
Superior financial track record
The Group has been profitable every quarter since inception.
Strong total equity
Strong total equity supporting the business growth.