Published May 6, 2009

Price fall, absence of one-off gain hit Noble's bottomline

By OH BOON PING

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COMMODITIES trading firm Noble Group yesterday reported a 46 per cent year-on-year plunge in its first-quarter net profit to US$90.2 million. It also separately unveiled a higher bid for Australia's Gloucester Coal.

The plunge in earnings was caused by two key factors: a general global decline in commodity prices, which pushed revenue down 36 per cent year on year to US$6.08 billion, and the inclusion in the comparative year-ago period of a US$47.95 million one-off gain on disposal of long-term investments.

Meanwhile, it said it has revised its bid price for Gloucester Coal to A$6 cash per share - up from A$4.85 previously. The bid aims to thwart a reverse takeover deal between Gloucester and Whitehaven Coal.

For the three months ended March 31, 2009, earnings per share were 2.79 US cents - down from 5.34 US cents.

Tonnage volume for the period rose 26 per cent year on year to a record 49 million tonnes.

'The tonnage level represents the highest tonnage volume in the group's history and evidence of Noble's ability to grow market share in a down market as well as positioning the group to benefit when market demand normalises,' the management said in a statement.

At the segmental level, its agriculture business posted revenues of US$1.6 billion, down from US$2.1 billion a year ago, due mainly to lower average selling price levels for most of its agricultural products except cocoa.

Tonnage volumes stood at 3.3 million tonnes - almost unchanged from the 3.4 million tonnes reported in Q1 2008.

Tonnage volumes for its grain division remained almost unchanged 'with a good contribution from or expanding cotton division'.

The segment sees completion of several projects such as the expansion of its UNP and Meridiano sugar and ethanol mill in Brazil, a new bulk liquids terminal at Santos, Brazil and a soya bean crushing plant in Argentina.

Under its energy segment, Q1 revenue dropped to US$3.3 billion from US$5 billion due to the decline in energy prices which reduced average selling prices in clean fuels, energy (thermal) coal, carbon products and carbon credits.

Despite the weak global economic environment, the segment reported a 19 per cent increase in tonnage volume to a record 20.7 million tonnes, compared with 17.4 million tonnes in the first quarter of 2008.

Indeed, the tonnage growth in its clean fuels division partly reflected the continued expansion of its business activities particularly from an expanded London operation.

Sales from its metals, minerals and ores segment dropped to US$1 billion - from US$1.8 billion.

The substantial declines in prices for iron and steel products was the cause, and this reflected the downturn in key demand markets, particularly in China.

Chairman David Eldon said in a statement that he sees weakness in global industrial production which has reduced input requirements. 'Nonetheless, Noble's net profit was satisfactory and the year-on-year improvement in our net profit margin is a good indication of Noble's ability to perform in a down market.'