InCommodities Plans Debt Raise After 96% Profit Collapse

Danish energy trader InCommodities A/S plans to borrow more money after profit fell 96% last year. The company, where Goldman Sachs Group Inc. holds a minority stake, will raise debt financing to push into physical natural gas trading in North America, Chairman Jesper Johanson said in an interview.

Earnings before tax dropped to €2.9 million ($3.4 million) from €72.5 million the year before. The collapse reflects a return to normal volatility in European power and gas markets after the 2022 energy crisis sent profits soaring.

“We definitely see potential in increasing our financial capabilities on the debt side,” Johanson said. InCommodities is active in more than 40 gas and power markets. North America did not turn a profit last year. The debt financing is meant to fund expansion beyond what equity alone allows.

InCommodities has traditionally relied on its own capital. Equity stood at nearly €500 million at the end of last year. Using more debt gives the firm room to deploy larger positions across its trading book, Johanson explained.

The 2022 energy crisis produced record profits for Danish trading houses including InCommodities, Danske Commodities (owned by Equinor ASA) and MFT Energy A/S. Those gains have been hard to repeat as markets calmed. Equinor’s Danske Commodities also reported a steep profit drop in the same period.

Goldman Sachs bought its stake in 2021, when European energy trading was still turbocharged by the war in Ukraine. The bank’s Alpha Score currently sits at 53 out of 100, with a Mixed label, in part because the commodity-trading cycle has turned less favorable. Equinor’s score is 51, also Mixed.

Volatility has returned this year, driven by the Iran conflict and its effect on global energy flows. Johanson warned that Europe faces winter price spikes because gas storage sites are not filling fast enough. Storage levels are at 44% of capacity, compared with a five-year average of 59%.

“The market is not sending any incentives to start to fill the gas storages,” he said. “Something needs to change fairly soon.”

InCommodities remains committed to its current ownership structure and is not considering selling additional equity, Johanson said.

For context on Goldman Sachs and Equinor, see the GS stock page and EQNR stock page.