NEWS - Noble's metals business returns to profit in Q1

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Vivian Teovivian.teo@fastmarkets.comJoint News Editor - Asia

Singapore 12/05/2016 - The metals and mining business at Noble Group returned to profit in the January-March quarter, with the segment reporting a $7-million profit before interest and tax after resizing and rationalising its metals operations.

The figure is down 88 percent from the first quarter of 2015 but has improved from the $175-million-loss reported for the October-December 2015 quarter.

Its metals segment's operating income from supply chains was $26 million in the first quarter, down 72 percent year-on-year but an improvement from the loss of $132 million for the fourth quarter of last year.

Metal and mining volumes moved during the first quarter at 6.8 million tonnes were down 36 percent year-on-year but up 1.5 percent quarter-on-quarter.

Other than resizing and rationalising its metals business, Noble has also realigned its regional focus, re-emphasising China, it said.

"With several supply agreements negotiated during first quarter 2016, we have enhanced our presence in the Chinese domestic markets," it said. 

Despite the volatility in LME aluminium prices in the first quarter of the year, there has been a clear upturn in the aluminium price trend due to production cuts by smelters and "emerging evidence of a recent upturn in China's economy", Noble said.

Noble had said in its annual report in March this year that it expects its metals business to return to profitability in 2016 as it focuses on the aluminium supply chain.

It booked an overall consolidated net profit of $40 million in the first quarter of this year, swinging from a $1.87-billion net loss in the October-December quarter.

Noble has removed a significant portion of the agricultural and mining asset drag on earnings, with the share of profits and losses from joint ventures and associates improving by $61 million from first quarter 2015, including $47 million of Noble Agri losses.
 
"The first quarter of 2016 has been about establishing a solid foundation for our operations," CEO Yusuf Alireza said. "Our focus on improving commercial opportunities in early 2016, despite capital constraints on our businesses, has already generated positive results with all major segments making a positive contribution."

Noble has also completed a $1-billion committed unsecured revolving loan facility and a $2-billion US borrowing base facility, it said on Thursday. The credit facilities address substantially all of the company’s remaining 2016 debt maturities, Alireza said.

Net debt at the company fell $281 million from the fourth quarter 2015 to $3.69 billion, which is also down $1.7 billion over the last 18 months.

Noble's top priority for the rest of the year is to deliver at least an additional $1 billion in liquidity by redeploying capital employed from low-return businesses, non-core asset sales and other capital raising initiatives, it said.


(Editing by Mark Shaw)



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