Noble Group's second-quarter net loss has blown out to US$1.75 billion (S$2.39 billion), owing to a huge allowance for exceptional items. It suffered a net loss of US$54.9 million in the same period last year.
In the three months ended June 30, Noble took a US$1.26 billion allowance for exceptional items relating to adjustments to writedowns on the value of commodity contracts and derivative instruments to account for added uncertainty in its operating environment, as well as the impact of credit rating downgrades on the discount rates it used in its calculations.
Noble saw revenue slide 19 per cent year on year to US$10 billion in the three months to June 30.
"Conservative liquidity management, scaling back of risk positions and constraints placed on the group's access to trade finance lines led to disruption costs and prevented the group from taking advantage of profitable opportunities," the Hong Kong-based and Singapore-listed commodity trader said in an exchange filing yesterday.
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Noble commenced a strategic review in May under new chairman Paul Brough, who replaced group founder and largest shareholder Richard Elman.
Debt reduction remains a priority under the review.
Noble plans to pare debt by selling its capital-intensive global oil liquids business. It will also cut headcount from 900 now to 400, and intends to raise net proceeds of between US$800 million and US$1 billion over the next two years by disposing other assets outside of North America.
AT A GLANCE
REVENUE: US$10 billion (-19%)
NET LOSS: US$1.75 billion
Meanwhile, it wants to recapitalise its hard commodities business in Asia, where volumes have remained fairly steady.
Noble continues to search for a white knight investor and seek further strategic alliances, including with trading house Mercuria, which has agreed to buy Noble's North American gas and power business for US$248 million by the end of this year.
At the end of June, Noble had bank debts of US$2.2 billion repayable in one year or less, up from US$1.3 billion as at Dec 31 last year.
Its cash balance fell to US$737 million at the end of June from US$1.17 billion at the start of the year.
Noble said it has received a two-month waiver on financial covenants under its committed unsecured revolving credit facility due May 2018. The waiver is until Oct 20 this year, in line with the Noble Americas Corp borrowing base revolving credit facility, which had also been extended to Oct 20.
Second quarter loss per share was US$1.3415, widening from a restated loss of US$0.0651 in the same period a year earlier.
The counter fell one Singapore cent or 2.78 per cent to 35 Singapore cents yesterday. The results were posted after the market closed, and the group had issued a profit warning last month.
Noble, a former Straits Times Index constituent, has seen its market cap sharply reduced since Iceberg Research began attacking the company for aggressive accounting in February 2015.