Noble shares crashed to new 15-year low; Q1 loss US$129.4 million

Noble Group shares crashed to a new 15-year low after suffering a first quarter loss of US$129.4 million. PHOTO: REUTERS

SINGAPORE - Noble Group shares crashed to a new 15-year low as the struggling firm announced a massive loss in the first quarter, while chairman Richard Elman said he has stepped down.

Investors wasted no time to dump Noble shares after the company issued an overnight warning that it may suffer a US$130 million (S$183.3 million) first quarter loss. The share price dropped 32.43 per cent as a result to close at 87.5 cents on Thursday (May 11) - lowest since 2002. The company just completed a 10-to-one share consolidation exercise.

The first quarter loss turned out to be US$129.4 million, Noble reported after the market closed, marking a major reversal from the US$40.5 million profit a year ago.

Revenue grew to US$12.49 billion, but "dislocation" in the energy coal market impacted profitability, Noble said.

It noted that while the coal futures Newcastle Index slipped 13 per cent in the period, the Chinese domestic market rallied 16 per cent.

"This impacted the effectiveness of the hedges that were in place against existing and future volumes," Noble added.

Ahead of the results announcement, company founder Richard Elman announced that he has stepped down from his position as chairman, to be succeeded by Paul Brough. Mr Elman will stay on as chairman emeritus.

In a statement issued alongside the company results, Mr Elman said the Noble's turnaround will not be "some superficial overnight Botox fill-and-smile" undertaking.

"Rather it'll be a long hard slog with ups and downs along the way, until we regain profitability, a goal that we are most likely to achieve in financial year 2018/19," he said.

These latest developments painted a bleak picture for a company that has had to sell assets and cut staff to ease its debt burden and return to profitability.

KGI Securities Singapore strategist Nicholas Teo said: "It's not the fact that it was hit by a loss that's surprising - any commodity trader can lose money.

"But the magnitude of loss, at a time when the company was supposed to be prudent instead of taking big bets, was what shocked the market."

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