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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, coal, carbon emissions, freight, iron ore, base metals 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.


Performance

Mercuria is one of the largest energy traders in the world. The Group had a successful year in 2016, when we sold 332 million metric tonnes of oil-equivalent - and our global revenues reached USD91 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.

 

Risk management

Mercuria manages market, financial and operational risks associated with transporting commodities in significant volumes around the world.

We aim to manage risks soundly accross 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.

 

Financial risk

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 continued to refine its business model through innovation and cement its positions across our core product segments and geographies.

Building upon our acquisition of the commodities books from J.P. Morgan Chase and Co., and strategic investment by ChemChina, we managed risk skillfully while reinforcing the strength of our model. This has demonstrated our ability to continually adapt to evolving commodities markets.

The banking and lender community reaffirmed its confidence in Mercuria’s approach and its substantial expansion in our potential through its continued eagerness to invest with us.

We have built a reputation as a reliable business partner during our 13-year history and we continue to work closely with our counterparties to provide new and innovative value.

In the ever-changing global economy, Mercuria is uniquely suited to seize upon development opportunities across Asia, Europe, the Americas and around the world.

Mercuria's Group CFO Guillaume Vermersch


Consistent growth of traded volumes

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 successfully diversified the range of its traded 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 Net Asset Value

Strong Net Asset Value supporting the business growth.


Consistent and solid performance from operations

The Group has consistently created value in very diverse market conditions.