Noble Group shares close at record low after company warns of losses in Q1

Noble Group will report its first-quarter results after trading in Singapore closes on Thursday (May 11).
Noble Group will report its first-quarter results after trading in Singapore closes on Thursday (May 11). PHOTO: REUTERS

SINGAPORE - Mainboard-listed Noble Group's shares plunged on Thursday (May 11) after the embattled commodity trader warned that it will record a net loss of around US$130 million (S$183.7 million) for the first quarter.

Noble's shares plunged the most on record to the lowest level in more than 14 years after it warned of a first-quarter loss and as S&P Global Ratings said the commodity trader's debt-load is unsustainable given its current earnings path.

Shares of the Hong Kong-based company, which counts China Investment Corp. as one of its largest shareholders, slumped 32 per cent to close at 87.5 Singapore cents, the biggest decline on record and the lowest level since October 2002. This has slashed Noble's market value to less than $1 billion in US dollar terms, a shadow of the US$10.2 billion (S$14.3 billion) trading behemoth it was in 2010.

The stock had tumbled 12 per cent to S$1.140 when trading opened and sank below S$1 by afternoon.

The profit warning stoked worries that the company's recovery from a deep restructuring could take longer than expected.

Noble, which will report its first-quarter results after trading in Singapore closes on Thursday, cited a challenging operating environment in its profit warning late on Tuesday night and said it was caught out by movements in coal prices.

It said the dislocation had caused "the decoupling of prices of key indices, liquidity dropping significantly and the breaking down of correlation." It did not give further details.

"The group has taken measures to re-align its portfolio to mitigate against both the continuation and repeat of such adverse events," Noble said.

The loss comes after two challenging years for the company, which was once Asia's largest independent commodity trader.

Its share price had plunged more than 80 per cent since the start of 2015, when its troubles started after its accounting practices and need to pay down debts were questioned by a group called Iceberg Research. This led to a startling collapse in its share price and stoked rating agencies' downgrades.

Noble has stood by its accounts.

The company, which appointed two new co-CEOs last year after its CEO quit, raised US$750 million from the sale of junk bonds in March. Shareholders also backed a 10-to-one share consolidation at the end of last month.