Noble Group reported another quarter of lower profit as the embattled company continued to reel under the pressure of the commodity crunch and losses incurred by associates. But the management stressed that Noble's fundamentals are solid and its core businesses had shown improvements.
Net profit for the three months to June 30 was down 5 per cent year on year to US$62.6 million (S$86.6 million) with a 22 per cent dip in revenue for the same period to US$18.4 billion, Noble said yesterday when announcing its latest results.
The key drag on earnings were the mounting losses of Noble's associates, such as Yancoal and Noble Agri. In the second quarter, the losses widened by 185 per cent year-on-year to US$67.7 million.
The second-quarter results followed a 29.6 per cent drop in first-quarter net profit. For the first half of this year, net profit was down 22 per cent year on year to US$169.2 million, while revenue was pared 16 per cent to US$35 billion.
In a briefing yesterday, Noble chief executive Yusuf Alireza noted that the weaker earnings was not a cause for concern.
"We all tend to forget we are in a bear market... In fact, we have seen (commodity) prices fall for the last four years, and if we have another down year in 2015, it will be the first time in the post-World War II period that the commodities sell off five years in a row."
The core business has, however, continued to grow, Mr Alireza added, citing a 40 per cent year-on- year increase in tonnage delivered in the first half.
In the same period, gross margins also recovered, up from the 1.42 per cent in last year's second half to 2.13 per cent. The group has also taken steps to cut costs, including a headcount reduction of more than 15 per cent this year.
Noble's results announcement yesterday came amid market anticipation of further disclosures on financials that the management hopes will silence critics such as Iceberg Research, which, in a series of reports since February, has accused Noble of accounting fraud and poor governance.
Shares in Noble have fallen more than 50 per cent since then.
In its latest bid to refute the allegations, Noble provided its first detailed presentation on Yancoal's valuation, one of the areas that Iceberg Research has zoomed in on.
Data provided by Noble yesterday also showed a healthy balance sheet, with net debt after adjustments for readily marketable inventories down to US$2 billion as of June 30 compared with US$2.4 billion a year ago. Net asset value was 77 US cents per share, up 2.7 per cent from Dec 31, while earnings per share was 0.86 US cent, down 2.3 per cent from a year ago. No dividend was declared.