Energy trader Danske Commodities posts record earnings for volatile 2021

OSLO/COPENAGEN, April 7 (Reuters) – Danish energy trader Danske Commodities said liquidity remained squeezed in the gas and power markets but has not impacted its business strategies or portfolio management, as it posted a six-fold rise in 2021 operating profits to record levels.

Extreme weather events, a faster-than-expected economic bounce-back from COVID-19 and low gas storage levels had resulted in historically high energy prices, putting immense pressure on the liquidity of many energy traders, Danske Commodities said when reporting its 2021 earnings.

“At the end of 2021 there were not a lot of market participants left, that’s for sure. And it’s actually not good for the market because it brings too little liquidity,” Chief Executive Helle Oestergaard Kristiansen told Reuters.

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She added that there still was “an imminent pressure” on liquidity in the market.

Still, the firm maintained the liquidity it needed “at all times” and benefited from its cooperation with its parent company, Norway’s energy major Equinor (EQNR.OL), its Chief Financial Officer Jakob Soerensen told Reuters.

There had been no effect on its business strategies or portfolio management, he said. “I think we are one of the few companies who can actually state that,” Soerensen added.

Last month, a European energy trade body asked governments and financial institutions for emergency liquidity to help energy markets cope with the extreme volatility caused by Russia’s invasion of Ukraine. read more

“As late as last week there was a pressure on margin calls during the day both on us and other market participants, so we’re not out of the woods in terms of liquidity risks yet,” Soerensen said.

Danske Commodities, which trades in 40 markets worldwide, said adjusted earnings before income and tax (EBIT) rose to 272 million euros ($297 million) in 2021 from 43.5 million euros in 2020.

The company is also continuing to expand and set up new offices in Brazil and Singapore, with the latter intended to prepare a possible expansion into Japan and New Zealand, Kristiansen said.

($1 = 0.9159 euros)

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Reporting by Nora Buli and Stine Jacobsen; Editing by Terje Solsvik and Jan Harvey

Our Standards: The Thomson Reuters Trust Principles.

Read More: Energy trader Danske Commodities posts record earnings for volatile 2021

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