June 7, 2019 / 4:02 PM / 13 days ago

Energy trader Gunvor bounces back in Q1 after tough 2018 - CFO

GENEVA, June 7 (Reuters) - Swiss energy trader Gunvor Group bounced back in the first quarter of this year after posting a steep net loss for 2018 as restructuring started to pay off, its new chief financial officer said.

The Geneva-based firm, which ranks among the top five oil traders, had a net loss of $330 million last year, compared with a net profit of $162 million in 2017. Revenues rose 39 percent to $87 billion.

A steep profit decline in 2017 had already prompted the firm to undergo an overhaul that began last year.

“We really took advantage of that challenging time to reposition the company, seek cost efficiencies and it proved to be effective. We have a very solid Q1 result ... It’s one of our best ever quarters for the group,” chief financial officer Muriel Schwab, who joined two months ago, told Reuters.

Gunvor cut support staff, hired more traders, promoted a younger generation, invested in automation and beefed up its governance.

Schwab added that its U.S. presence, which started two years ago, had overcome its start-up phase and transformed Gunvor into a global player.

“We became leaner on the support side but concurrently we also had that generational shift ... and we’re bringing new skills into the company,” she said.

It recently appointed a new chief operating officer, Gia Mai, and condensed its executive committee to seven people. These also include the chief executive, the CFO, the managing director of Asia-Pacific along with three senior traders. Former CFO Jacques Erni left the firm at the end of May.

The company said the loss last year was due to one-offs including the cancellation of an upgrade at its Rotterdam refinery, a write-down of its investment in a Caspian Sea oil block, unpaid receivables and litigation in China and in Switzerland relating to a Congo Republic investigation.

To deal with the losses, Gunvor told its bankers this year that it would take action, including with asset sales.

Schwab said Gunvor was in advanced talks to sell its 26% stake in an oil products terminal at the Russian Baltic Sea port of Ust-Luga. This move takes priority over the sale of a stake in its German refinery at Ingolstadt, where the firm was “testing the waters”, Schwab said.

Plans to sell the firm or bring in a strategic investor have been pushed to the long term.

“We’re basically cleaning our house and today, we’re much stronger ... We’re not in a rush, we’d like a strategic partner rather than a financial sponsor. We’re looking in the long term for someone that can complement our business model,” she said.

Its traded volumes rose slightly to 185 million tonnes last year from 184 million tonnes, with crude and oil products steady at around 2.7 million barrels per day.

Gunvor CEO Torbjorn Tornqvist’s stake in the company rose to about 76% by the end of 2018, from around 64% at the end of 2017.

Looking forward, the firm wants to take a lead in the energy transition by investing in cleaner natural gas, especially liquefied natural gas (LNG), along with biodiesel.

Gunvor became the biggest LNG trader last year at 11 million tonnes.

Ahead of new rules on shipping fuels taking effect next year, Gunvor is evaluating plans to halt output of high-sulphur fuel oil at its Rotterdam refinery and replace one of the two crude distillation units with a biodiesel unit.

The firm has investments in 17 oil product tankers that it intends to double by next year. (Reporting by Julia Payne; Editing by Dale Hudson)

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