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Let’s Look at Noble Group’s First Quarter Results

Ser Jing - Let's Look at Noble Group's First Quarter Results (pic)Noble Group (SGX: N21) released its first quarter results on Tuesday evening. The company posted a small 1% year-on-year decline in quarterly revenue from US$22.8b to US$22.6b. But, profit for the quarter endured a much poorer performance, falling 62% from US$110.1m a year ago to US$41.3m.

The company consists of three main segments: Agriculture, Energy and Metals & Minerals. Let’s take a closer look at how each segment fared.

The Agriculture segment saw a 5% increase in tonnage for the quarter from 8.6m tonnes a year ago to 9m tonnes. But, revenues still fell by 12% from last year’s US$3.67b to US$3.23b. Operating income for the quarter also performed poorly, swinging from US$47.3m a year ago to an operating loss of US$66.6m.

For the rest of the year, management will continue the build out of its agricultural platform and have estimated better yields and volumes for key crops in its South American harvests compared to 2012.

Moving on to the Energy segment, we see tonnage increase by 1% year-on-year for the quarter from 29.6m tonnes to 29.9m tonnes. That was accompanied by a 10% decrease in revenue to US$14.6b. But, quarterly operating income from the segment managed to grow by 6% from US$348.5m to US$368m. For some future outlook, management commented that the company will continue to “build out our origination and distribution capacity”.

Lastly, we have the Metals & Minerals segment. Quarterly tonnage for this segment decreased by 7% from 14.8m tonnes a year ago to 13.8m tonnes but its top-line grew by an impressive 60% to US$4.75b. That did not help improve profitability though, as the segment’s operating income slipped by 78% from US$64.9m to US$14.6m. The recently completed quarter was notable for the segment as the company has begun to diversify its product portfolio away from its main products of iron ore and aluminium.

Turning to the company’s balance sheet, the company will have US$1.22b worth of debts to be repaid by the end of 31 March 2014. Noble sees no issues with debt repayments as the company has already ear-marked a portion of its US$6.8b liquidity-headroom to refinance US$500m worth of the due-debt. The company’s committed banking facilities and cash-on-hand is also more than adequate to refinance any outstanding debt. Noble carries a total of US$5.97 in debt and US$1.08b in cash on its balance sheet as of 31 March 2013.

Regarding the quarter, Noble’s Chief Executive Officer, Mr Yusuf Alireza, commented that the company will “continue to execute on our strategy, moving to an asset light model and strengthening our balance sheet while selectively investing to build future origination volumes across our diversified product platforms. In a difficult market environment, our efforts to control costs and focus on core business competencies are starting to have an impact.

Noble continues to build out its sugar milling capacity in line with earlier guidance while we expect our agricultural segment to gain momentum as we move into the main harvest periods.”

Shares of Noble are currently at $1.12, with a Price-Earnings ratio of 15 and a dividend yield 2.0% based on last year’s full year pay out.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.