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Abu Dhabi, UAETuesday 11 December 2018

Noble Group posts another earnings loss

Decline in one of company's core remaining businesses highlights the challenges that still lie ahead for the trader as it loses $12m in third quarter

Noble Group is still having a difficult time amid further losses. Reuters
Noble Group is still having a difficult time amid further losses. Reuters

Embattled commodity trader Noble Group - which is pushing toward the final stages of a complex $3.5 billion debt-for-equity restructuring - reported another quarterly loss, with the result driven by costs from the revamp as well as getting caught out in the LNG market.

The energy segment, which consists of liquefied natural gas, coal and oil liquids in Asia, had an operating loss on supply chains of $12 million in the third quarter, the company said. As a whole, the company reported a net loss of $99m for the period, in line with a warning last month.

“The loss in the energy segment is almost entirely due to LNG, we had a couple of cargoes - as you know, they’re pretty big cargoes - we found ourselves on the wrong side of those,” said chief financial officer Paul Jackaman. The transactions were unhedged, according to Mr Jackaman.

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The loss in one of Noble’s core remaining businesses highlights the challenges that still lie ahead for the trader, which is pressing on with the last steps in the restructuring that will see control handed to senior creditors. In recent years, the Singapore-listed company has spiralled lower after reporting billions in losses, selling assets and sparring with critics over the integrity of its accounts. The rescue has been backed by creditors and existing shareholders.

“The rest of the business in the energy segment traded pretty much flat for the quarter as we worked through and prepared the company for the restructuring,” Mr Jackaman said. When the revamp goes through, Noble Group will have access to fresh trade-finance facilities.

Among the other key figures for the three months to September, revenue fell to $1.21bn from $1.41bn a year earlier, while tonnages handled sank to 12.5 million tonnes from 16.9 million. Restructuring costs totalled $32.8m, on top of the $114m already spent in the first half.

The results in the first nine months were hurt by expenses “associated with implementing the restructuring, finance costs on existing senior debt and losses from discontinued operations,” it said. “The constraints are expected to be alleviated by the new trade-finance facility.”

As a whole, operating profit from supply chains was $49.2m in the latest quarter, with results bolstered by its metals business, including a “solid” performance from the Jamalco alumina refinery in Jamaica.