Noble's Q1 profit down 30% to US$106.6m

WEIGHED down by lower commodity prices and poorer-than-expected performance of its two major operational associates, commodity trader Noble Group's first-quarter net profit for the three months ended March 31, 2015, plunged 30 per cent to US$106.6 million, compared to US$152.3 million in the year ago period.

Over the same period, the group's revenues fell 7.33 per cent to US$16.64 billion, versus US$17.96 billion recorded in the corresponding period last year.

The group said in a statement that its more traditional China-related commodities such as iron ore, freight and coal continue to face significant headwinds and that sentiment in these sectors are at historic lows, while the investments that it made in its oil, power & gas and metals franchise over the last few years continue to drive the growth in its bottom line.

Noble added that its two major operational associates - which includes a 13 per cent stake in Australian coal company Yancoal and a 49 per cent stake in agribusiness Noble Agri - have also "underperformed compared to our expectations", lowering group net income by about US$70 million for the quarter.

Meanwhile, it said that net fair value on commodity contracts and derivative financial instruments fell to US$4.2 billion in the quarter, compared to US$4.6 billion a year ago. The US$393 million drop was mainly due to the roll-off of short-term contracts in its oil liquids division, the group said.

Hong Kong-based Noble, one of Asia's largest commodities trader by revenue, has recently come under fire for its accounting practices, following a series of criticisms by several outfits, including little-known Iceberg Research and short-seller firm Muddy Waters.

In response, Noble has promised to increased disclosures commencing with its Q1 FY2015 results, which was been brought forward by two days. On Tuesday, Noble said that it has adopted some of the disclosure protocols for its Q1 unaudited earnings results and other filings that it had previously only used in its annual report.

Noble said it has adopted EBIT (earnings before interest and tax) level segmental profit and loss disclosure, and has split its energy coal and oil liquids business into one reporting segment and its power and gas, along with Noble Americas Energy Solutions, into another. Previously, they were combined.

Separately, Noble announced on Tuesday that it has received commitments in the aggregate amount of US$2.25 billion, subjected to customary conditions, following the launch of its syndicated committed unsecured revolving loan facility on April 8, 2015. The company will use the amounts borrowed under the facility for the refinancing of some of its existing debts and for its general corporate purposes.

For the three months ended March 31, 2015, Noble's earnings per share stood at 1.54 cents while net asset value per share was 76 cents. No dividends have been declared for the quarter.

Before results were released on Tuesday, Noble closed trading up 4.09 per cent at S$0.89, but down about 26.1 per cent since Feb 15, 2015, when Iceberg Research launched its first attack.