Commodities trader Noble swings to second quarter loss

 
Jessica Morris
Follow Jessica
This general view from 'The Peak' shows
Noble is based in Hong Kong (Source: Getty)

Embattled commodities trader Noble swung to a loss in the second quarter, as it continued with a turnaround plan to regain investor confidence.

The Hong-Kong based group said today that it had initiated the sale of its power marketing business Noble Americas Energy Solutions, with the proceeds due to be ploughed into its turnaround plan.

"Interest in the sale has been strong and we are now entering the latter stages of the process, with completion expected in a couple or so months' time," Noble's British born founder and executive chairman, Richard Elman, said.

Read more: Negative credit ratings for companies are at the highest level since the recession in 2009 and 2016 spells more defaults

"As we receive proceeds from these various initiatives, our growth businesses will be able to get onto the front foot once more, as liquidity constraints ease and we focus on looking to the external markets and developing our businesses."

Noble shares have suffered a dramatic drop since February when Iceberg Research alleged the company was inflating its assets by billions of dollars by not fairly representing the value of its commodity contracts. Noble rejected the claims and consultant PWC found no wrongdoing in a report.

This prompted ratings agency downgrades from Moody's, Standard and Poor's and Fitch. It's also forced Noble to sell off assets.

Its woes were compounded when chief executive Yusuf Alireza unexpectedly quit in late May. Elman said the following month that he will step down within the next year.

The NAES sale will help the company shore up its increasingly stretched balance sheet and comes after a $500m rights issue last month.

Read more: Commodities hedge funds shrug off money manager woes amid metals boom and oil price uptick

Noble said today that revenue fell 32 per cent year-on-year to $12.5bn in April-June. This helped push it to a net loss of $14.4m during this period, down from a profit of $169.2m a year earlier.

"Our focus on generating additional liquidity, especially in the latest quarter, has directly impacted our ability to generate operating profit,” it said in a statement.

"To preserve liquidity, we constrained working capital to all businesses, including those with strong franchises."

Related articles