Singapore 23/02/2016 - Singapore-listed commodity trader Noble Group said early on Tuesday that it expects to post a net loss for the October-December quarter and the full year of 2015.
It expects to recognise $1.2 billion of non-cash impairments and exceptional adjustments in the fourth quarter, in addition to the loss on the sale of Noble Agri.
Since September 2015, a number of factors have contributed to the lowering of long-term consensus prices for coal and other commodities, this including crude oil prices falling by almost 40 percent over a short period of time and growing concern about weaker global and Chinese economic growth, Noble said.
As such, the company has adopted a more “conservative” price for thermal and metallurgical coal against a possible scenario that coal prices will remain at lower levels for an extended period.
It also made similar adjustments across its entire portfolio of net fair value gains on commodity and other derivative financial instruments, resulting in a significant increase in the effective discount rate to 20 percent, it said.
The adjustments are non-cash items and have no impact on the company's cash position or cash flows, the company noted.
Noble added that it expects to report positive cash flow from operations in the fourth quarter, generating a cumulative total of around $650 million for the second half of 2015.
Its debt has also further declined by $248 million since end-September to $2.26 billion at end-2015, prior to the receipt of $750 million from the sale of its 49 percent stake in Noble Agri.
Noble said it will continue to focus on ensuring ample access to liquidity and expects to deliver $1 billion in further liquidity by March 2016 which includes Noble Agri proceeds.
Noble’s share price last traded at 37 Singapore cents ($0.26) on Tuesday, unchanged from its Monday close. Its share price had lost nearly 70 percent over the past year amid plunging commodity prices and liquidity concerns, which saw rating agencies downgrade its bond ratings to junk.
Noble will release its financial results on Thursday.