Noble Group sinks into the red with US$1.6b loss in FY15

Extremely low coal prices are to blame.

Asia’s largest commodity trader booked a loss of US$1.6 billion ($2.24 billion) for 2015, mainly on back of huge impairment losses brought about by depressed coal prices.

Noble Group released its full-year results on Friday, a mere two days after warning investors that it was not profitable for the year.

The commodity trader’s loss mainly stemmed from a a US$1.06 billion write-down related to its coal contracts. The write-down formed bulk of a US$1.9 billion impairment which included losses related to the divestment of its stake in loss-making Noble Agri, as well as losses from its associate companies and joint ventures, including impairment losses related to its investments in Australia-based Cockatoo Coal and Yancoal.

“In the light of the recent changes in the outlook for the energy complex, management has determined that it was appropriate to adopt a conservative price of US$55 per tonne for thermal coal, to ensure that our contracts will be covered against a possible scenario of 'lower prices for longer'. This pricing is US$14 per tonne below the average market consensus price,” Elman said.

On an adjusted basis, Noble’s net profit would have been around US$244.2 million, a sharp decline compared to US$585.6m in the previous year.

“As a result of this difficult environment our focus, ahead of all other considerations, has been, and will continue to be on maintaining adequate liquidity and generating cash. With that in mind we have been forced to make some difficult decisions, closing certain businesses and selling assets. We feel this continues to be the right focus and those actions, although tough, are the right decisions for the current environment,” Elman said.