Noble Group reports second quarterly loss on hunt for liquidity

SINGAPORE (BLOOMBERG) - Noble Group, the commodity trader that's backed by China's sovereign wealth fund, reported a net loss for a second straight quarter after pledging to prioritise boosting cash flow ahead of earnings.

The net loss was US$28.1 million (S$39.1 million) in the three months to September compared with net income of US$24.7 million a year earlier, the Hong Kong-based company said in a statement on Thursday (Nov 10). 

Sales declined 38 per cent to US$11.6 billion, while liquidity headroom rose to US$1.2 from about US$800 million at the end of the previous quarter.

Noble Group has been divesting assets and cutting costs to bolster its balance sheet after the company was roiled by a share price collapse, a full-year loss and a downgrade to junk. Chairman Richard Elman reaffirmed plans to regain profitability in the next one or two years when the trader secured approval from shareholders last week to sell a US energy unit, which largely caps a drive to raise US$2 billion.

"We have made significant progress on our initiatives to raise capital and rationalise our businesses," Noble Group said in the statement. "Our 2016 results have been significantly impacted by our conservative approach to liquidity management. Businesses continued to be constrained in the latest quarter and are operating well below optimal earnings' capacity."

Between April and June, the company reported a loss of US$54.9 million. When announcing the second-quarter results, chief financial officer Paul Jackaman said there had been an increased emphasis on liquidity over profitability, with a focus on deleveraging and that's "had consequences on results".

Noble Group's shares advanced 13 per cent to close at 20.5 Singapore cents before the earnings report. While the stock has rebounded from a low of 11.2 cents in September, it remains 32 per cent lower this year after plunging 65 per cent in 2015.

Net debt decreased to US$3.42 billion by Sept 30 from US$3.92 billion three months earlier, the company said.