Categorized | Singapore Trading News

Noble 2Q net jumps 63% as trading volumes rise

Noble Group, the Hong Kong-based supplier of energy, food and mining commodities, reported a 63% jump in second-quarter profit, boosted by bigger trading volumes.

Net income rose to US$139.8 million ($170 million), from US$85.9 million a year earlier, the Singapore-listed company said in a statement today. That’s the second-largest profit for the period in nine years. Sales increased 52% to US$19.7 billion, helped also by higher commodity prices.

Asian consumption of commodities ranging from coal to copper drove a 13% increase in Noble’s first-half trading volumes to 98 million metric tons. Higher demand also spurred the company to join competitors including Glencore International Plc in expanding stakes in global assets.

The Standard & Poor’s GSCI Index of 24 commodities averaged US$705.67 in the second quarter, 37% higher than a year earlier. It’s fallen 16% since the beginning of May on concern the US economic recovery may slow and Europe’s debt crisis may spread.

“This record performance demonstrates the resilience of our business in times of market volatility,” Noble said in the statement.

The net income margin grew to 0.86% in the first six months of the year from 0.67% a year earlier, Noble said. Glencore posted a profit margin of 2.59% in 2010.

Stock Slump

Higher earnings at Noble haven’t prevented a decline in the stock price. The shares have tumbled 27% since July 1 as debt concerns roil global markets. The Straits Times Index has dropped 10% in the period.

Chief Executive Officer Ricardo Leiman declined to say whether the stock slump would encourage Noble to repurchase shares, saying only that the company had held buybacks in the past and will continue to do so.

“The climate is extremely volatile and the visibility is poor,” Leiman said on a conference call today. Noble’s “strong” balance sheet makes it resilient to the turmoil, which may bring credit shortages in the market, he said.

In July, Noble got a US$3.2 billion revolving credit facility, its biggest loan to date and more than the US$2.25 billion it initially sought. Proceeds will be used to refinance debt and for general corporate purposes, the company said.

Iron Ore Prospects

The balance sheet will also help Noble look for assets, including in iron ore, especially as market volatility hurts weaker rivals, Leiman said.

Noble, which counts billionaire Richard Elman and China’s sovereign wealth fund among its biggest shareholders, put in the highest bid for 90.51% of Territory Resources in June. Noble already owned 32% of Territory, a Perth-based iron-ore producer with a capacity of 2 million tons a year.

Noble produces about 10% of the products it trades, buying the rest, Chief Financial Officer Robert Van Der Zalm said on today’s call. Outside oil, gas and electricity sales, Noble Group sells 75% of its products to emerging-market economies, he said.

The group plans to set up a South African plant to process soybean and sunflower seeds into edible oil and feedstock, Rob Louw, chief executive officer of Noble’s partner in the deal, Altius Investment Holdings, said July 19. The US$16 million project will be the largest of its kind in the country, he said.

Noble reorganized its Australian coal holdings in the second quarter, selling Donaldson Coal to its Gloucester Coal unit for A$360 million ($446 million) in shares, the companies said on May 16. Noble now holds 63.4% in Gloucester, it said today.

Noble also booked a US$60 million profit gain in the first half from the disposal of its fleet management business.

Adapted from i3investor.com & Bloomberg.

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