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Net Profit Down 48% at Noble Group Limited

Noble Group (SGX: N21) posted its full year results for 2013 on Friday evening. The firm saw revenue increase by 4% year-on-year to US$97.9 billion while its net profit slumped 48% to US$243.5 million. This led to Noble’s fully diluted earnings per share (EPS) dropping by slightly more than 50% from US$0.071 in 2012 to US$0.034.

Operating from over 140 locations worldwide, Noble manages a portfolio of global supply chains covering a range of agricultural and energy products, as well as metals, minerals and ores. Noble is one of the components of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI), and within the index the company counts Olam International (SGX: O23) and Wilmar International (SGX: F34) as fellow players in the commodities space.

Noble has a triad of business segments: Agriculture; Energy; and Metals, Minerals & Ores (MMO). In 2013, revenue from all the business segments had grown with the MMO segment growing the fastest at 16.7%. Total volume from all the segments increased from 224 million tonnes in FY 2012 to 233 million tonnes in FY 2013.

The year-on-year decline in net profit of 48% was mainly due to “loss from associates and the loss on income from supply chain assets”. The majority of this associate loss was attributable to the firm’s interest in coal miner, Yancoal Australia Ltd, and is largely non-cash in nature.

Compared to a year ago, Noble’s balance sheet has weakened slightly. As of 31 December 2013, Noble had a cash balance of US$1.1 billion and total debt worth US$6.1 billion. This translates to a net debt-to-capitalisation ratio of 49.7%, a rise of 0.8 percentage points from a year ago.

Noble generated US$805.5 million in net cash from operations, a decline of 9.8% year-on-year.

The company’s Chief Executive Officer, Yusuf Alireza, commented on the year’s results:

“Our headline net profit masks the fact that our underlying operating performance improved as the year progressed. In the last quarter, all of our Segments showed year-on-year growth in operating income from supply chains… I am confident that Noble has taken the steps to ensure that our returns will start to normalize as our production partners find our customer franchise ever more valuable in an over supplied market. This confidence is reinforced by the fact that we now have the quality and depth of management to match our ambitions and to be able to exploit the structural changes in both old and new markets.”

Shareholders will receive a final dividend of US$0.0091 per ordinary share. In FY2012, a final dividend of US$0.0181 per ordinary share was dished out.

Noble closed at S$0.985 on Friday. After converting the diluted EPS and dividends to Singapore dollars at a rate of US$1 = S$1.27, the firm is trading at 22 times trailing earnings and has a historical dividend yield of 1.2%.

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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 Sudhan P doesn’t own shares in any companies mentioned.