Commodity trader Noble Group warns of more losses in third quarter
Troubled commodity trader Noble Group, which almost blew up in an accounting and debt scandal before pushing through a dramatic financial restructuring in August, will report another loss in the third quarter.
The Singapore-listed commodity house, which was founded by British born trader Richard Elman, is expected to report an overall net loss of $90-$115m, the company said on Monday. It blamed financing and restructuring costs and losses from discontinued operations as it has done in previous quarters.
Noble Group once had ambitions to be an Asia-based version of Glencore, buying up mining and agriculture assets and growing to become a full-scale international commodity trader.
But over the past three years questions about its accounting and huge debts led to its near collapse, before its creditors agreed a major haircut in a debt-for-equity swap that left shareholders with a much smaller slice of the restructured company. Shareholders have also backed the restructuring, which is now pending court approval.
Noble, which has retrenched substantially back to its core Asia-focused coal and metals businesses, said that its profit from its operations before interest, tax and restructuring expenses would be $20-$35m for the quarter.
One of its few remaining assets, a joint venture running the Jamalco alumina smelter in Jamaica, has provided the company with an unexpected boost this year after the price of the key ingredient in aluminium spiked following the imposition of US sanctions on Russia’s Rusal.
Noble said its overheads for selling, administrating and operating the shrunken company have fallen towards $100m annually, which it expects to achieve in the fourth quarter.
Total cash and cash equivalents were $580m, down from $621m at the end of the second quarter, a drop the company said was down to restructuring expenses and increases in working capital. Of that figure, $175m has pledged as collateral for credit facilities.
Noble said losses from discontinued operations, including its global oil trading business that it sold to Vitol in January, were $55m. Noble said talks about the final closing date for the deal were “ongoing”.
Chief executive Will Randall, an Australian, made no comment in the release.
The group’s results for the first nine months will be released on November 13.