Singapore 22/03/2016 - Noble Group expects its metals business to return to profitability in 2016 as it focuses on the aluminium supply chain, the Singapore-listed commodity trader said in its annual report on Tuesday.
A turbulent 2015 saw the company “re-trench to enforce our strongest franchises – the aluminium supply chain through from bauxite and Jamalco and onto wholesale distribution, and our long established Asian customer metals franchise", Yusuf Alireza, Noble’s CEO, said in the report.
“We have every reason to expect a return to profitability in 2016,” he continued.
Noble’s metals and mining business had registered a pre-interest and tax loss of $229 million in 2015.
Overall, the company recorded a net loss of $1.672 billion in 2015 against 2014's net profit of $132 million due to $1.9 billion of impairment losses.
“We have made a conscious effort to reduce our balance sheet and downsize our global metals business, bringing greater focus onto our vertically integrated alumina and bauxite business, through Jamalco, as well as onto our core bulk metals business in Asia,” the report added.
Jamaica’s Jamalco, which Noble had acquired a 55 percent stake in in 2014, is a major alumina producer also involved in bauxite mining.
Noble had steered its business away from markets like copper and zinc and reallocated its capital into its core business like alumina and aluminium, sources had told FastMarkets in October last year.
Noble also noted a “brightening outlook” for alumina prices.
After a downturn in 2015, alumina prices have recently “shown signs of stabilising and the outlook is brightening.” China’s alumina production has seen a slowing rate of growth and closures elsewhere, notably in the Americas, should contribute to a rebalancing of the market, it said.
“Prospects for demand growth in primary aluminium translate directly to positive prospects for alumina and bauxite,” it added.
Noble’s share prices rose 5.6 percent to 47.5 Singapore cents ($0.35) so far on Tuesday.