Noble plunged into US$4.94b loss in 2017

It blamed the US$3.24b non-cash reserve losses on fair value gains of commodity contracts.

The struggling Noble Group Limited (Noble) dived into the red from a measly US$87m profit in 2016 to a US$4.94b loss in 2017.

According to its financial statement, the discontinued Global Oil Liquids and North American Gas & Power operations recorded a post-tax net loss of US$1.05b. “This is inclusive of operating losses in the businesses, as well as non-cash losses on impairment and sale of the assets and other amounts related to the final operating expenses and other adjustments associated with the sale of NAC and the wind-down of certain remaining Global Oil Liquids working capital balances in NCFL,” it added.

The total net loss also included US$3.24b of exceptional items recorded during the period from the Group’s continuing operations. “The exceptional items from the Group’s continuing operations include certain non-cash reserves and adjustments taken against the Group’s valuations of its net fair value gains on commodity contracts and derivative financial instruments as well as other provisions.”

Non-cash reserves and adjustments to the Group’s net fair value gains on commodity contracts and derivative financial instruments of approximately US$2.15b were recorded as an operating loss from supply chains. Non-cash impairment losses to certain current and non-current assets and a non-cash loss resulting from the significant dilution of the Group’s shareholding in Yancoal Australia (Yancoal), which, in aggregate, amount to approximately US$140m recorded as an operating loss from supply chains and US$900m recorded as losses on supply chain assets.

Total volume in its Energy Coal business declined by 7% YoY, as the business was able to compensate the 19% YoY decline in offtake volumes by increasing marketed tonnage. The LNG business continues to execute on its existing contracted flows, but was unable to add profitable new business flows given the Group’s constrained liquidity and access to trade finance lines.

Noble noted that the Base Metals business continued to focus on a measured build based on existing relationships in our key origination markets – namely Central Asia and Africa – with sales into China, South East Asia, Middle East and Europe. “However, volumes were impacted by the Group’s constrained liquidity,” it added.

The dry bulk sector continued to improve in 2017 following last year’s intensive scrapping activity, coupled with growing seaborne demand. The increases were led largely by the Capesize sector which moved from the Q3 2017 average charter rate of US$14,653 to a Q4 2017 average of US$22,995, and reached a peak daily rate of US$30,000 during December 2017. Panamax and Supramax vessels followed suit with QoQ increases of 18% and 16%, respectively.

“Although the business has been able to enter into select new time charters to benefit from rising markets, the challenges faced by the Group has impacted the business’ ability to fully take advantage of the current market’s improving fundamentals,” Noble concluded.

The group has constantly been hit by criticism and attacks from shareholders in different firms. Abu Dhabi-based Goldilocks, one of the top shareholders of Noble Group Limited (NGL), has piled the pressure on the struggling commodities trader after it warned other shareholders to reject the company’s debt restructuring plan. The fund currently owns 8.1% of NGL.