* Traded oil volumes fall slightly to 261 mln tonnes
* CEO Taylor says markets increasingly competitive
* Trading houses struggle to convert growth into profits
By Emma Farge and Dmitry Zhdannikov
GENEVA, Feb 28 Vitol, the world's biggest oil
trader, reported revenues that topped $300 billion for the first
time in 2012, while its profit margin was under increasing
pressure after slipping below 1 percent to a four-year low the
Revenues rose by 2 percent to $303 billion, despite a slight
drop in traded volumes, along with a rise in energy prices, the
Swiss firm said on Thursday. The figure exceeds revenues
reported by U.S. No. 2 oil major Chevron.
"It was a year without the additional advantages of market
structure or volatility that previous years have offered, and
trading markets continue to become increasingly competitive,
with additional pressure on margins," President and Chief
Executive Ian Taylor said in a statement.
The results showed the challenges that trading houses face
in turning growth into profits. In their constant quest to
conquer new markets and secure bigger volumes, they rarely end
up generating a higher rate of return.
In 2012, furthermore, Vitol failed to repeat its whopping
sales gains of 2011, when it increased volumes by 15 percent and
revenue by 44 percent to $297 billion.
Like most other private commodity trading houses, Vitol does
not release its profit figures publicly. But a copy of a 2011
filing obtained by Reuters showed that its profit margin and
cash flow had fallen to their lowest levels in four years.
In 2011, its gross profits rose only by around $100 million
to $2.438 billion, generating an overall gross margin for the
year of 0.8 percent, down from 1.1 percent in 2010, 2.7 percent
in 2009 and 1.2 percent in 2008, according to Reuters
Vitol, owned by some 330 employees, said 2011 net profit was
$1.7 billion, up from $1.5 billion in 2010, and the second
highest ever after $2.3 billion in 2009.
By comparison, Chevron's net profit was $27 billion in 2011.
Vitol's closest competitor, Glencore, has yet to
release its revenue figures for 2012. It previously said its
margins in the oil trading business were around 1 percent.
Vitol, like many of its peers, has stepped up efforts to
acquire physical assets as it seeks to extend control over
supply lines in search of higher profit margins.
The trading firm has expanded in the African fuel
distribution business through a 40 percent stake in Vivo Energy
and has expanded its footprint in the west African upstream
"We continue to look at a variety of new investment
opportunities in the midstream and downstream energy sectors,
which can deliver growth and synergy with our core trading
business," Vitol said in the statement.
Taylor said he expected growth in global oil demand to be
constrained in 2013 at around 1 million barrels per day (bpd)
due to weakness in some European economies.
This compares with an estimate of 1.05 million bpd from the
U.S. Energy Information Administration.
He estimated non-OPEC supply would grow by around 1.5
million bpd in 2013 due mostly to new production in the United
States and Canada, currently enjoying a shale boom.
Vitol, alongside AtlasInvest, purchased a Swiss refinery
from insolvent group Petroplus last year, increasing its
presence in the European downstream market.
"The new capacity planned to come on line later in 2013 is
expected to exceed the growth in demand we are forecasting, so
we expect refinery margins to be somewhat lower later this year
after an unexpectedly strong first quarter," he said.
The company traded some 261 million tonnes of oil and
products in 2012, down from 273 million in 2011.