GUNVOR VS USA

Energy trader Gunvor Group Ltd reported Wednesday a slight increase in profits in 2013 and said business has returned to normal after one of its co-founders was included on a list of Russians facing U.S. sanctions last month.

Geneva-based Gunvor said its net profit rose 2% last year to $308 million from $301 million in 2012 thanks to improved trading margins and higher revenue from the company's investments in oil terminals and other fixed assets. It's the first time private company Gunvor has published a full set of annual results.

While Gunvor's refinery business suffered from a weak market in Europe, it still made money and the performance of the company's relatively new coal-trading desk was a particular "bright spot", said chief executive Torbjorn Tornqvist.

Gunvor's revenue declined slightly last year to $91 billion from $93 billion a year earlier on steady trading volumes of 131 million metric tons, it said.

The results follow a turbulent month for Gunvor, one of the world's biggest independent energy traders.

Co-founder Gennady Timchenko sold his 43.5% stake in the company to Mr. Tornqvist after he was put under sanctions by the U.S. Treasury, part of the U.S. government's retaliation for Russia's annexation of Crimea. While Gunvor was not itself included in the sanctions roster, the Treasury said that Russian President Vladimir Putin was an investor in the outfit and might have access to its funds.

Gunvor has labelled the allegations "outrageous" and moved quickly to distance itself from Mr. Timchenko, announcing that Mr. Tornqvist bought his stake in the company before the sanctions were imposed. For a time though, Gunvor was left scrambling to reassure its banks and trading partners that they would not fall foul of U.S. sanctions by continuing to do business with it.

"Everything is as normal. We have not lost a single counterparty or bank," Mr. Tornqvist told The Wall Street Journal in an interview on Wednesday.

Tensions between Russia and Ukraine remain high, and the U.S. has raised the possibility of further sanctions against Russian individuals if talks between the U.S., Russia, Ukraine and European diplomats this week are unsuccessful.

However, Mr. Tornqvist said that while cautious, he sees no reason for Gunvor to be a particular target.

"We have really been dragged into something that is clearly very political and nothing to do with us," he said.

Founded in 2000 by Messrs. Timchenko and Tornqvist, Gunvor made its name trading large volumes of Russian crude, but has since diversified and now says less than 20% of its total trading volumes originate in Russia.

The ownership reshuffle last month left Mr. Tornqvist with an 87% stake in the company and could signal more changes in the longer term.

"This type of concentrated share ownership is for the long term probably something that is not benefitting the company, but it's not a priority today," said Mr. Tornqvist, refusing to be drawn on whether he would seek to sell a stake to a private investor, or even consider an initial public offering.

"I don't exclude anything," Mr. Tornqvist added.

wsj.com