November 9, 2011 / 10:32 AM / 9 years ago

UPDATE 1-Noble posts first quarterly loss in over a decade

* Q3 net loss of $17.5 mln vs $157 mln net profit a year ago

* Says planned agribusiness IPO making good progress

* Hurt by mark-to-mkt losses amid volatile commodity prices (Adds details)

By Eveline Danubrata

SINGAPORE, Nov 9 (Reuters) - Singapore-listed commodities firm Noble Group posted on Wednesday its first quarterly loss in more than a decade, hurt by turbulence in commodity prices as the global economy weakened.

But the company said it had made good progress in the planned listing of its agriculture business in Singapore and potential investors were reacting positively.

“For the first time since we started writing these statements well over a decade ago we are reporting a net loss for a quarter,” said Noble chairman Richard Elman in a statement.

“It goes without saying that we are very unhappy with this performance even if it does just cover a very short period.”

The volatility was not just restricted to Noble’s industry and markets, but was a result of the unstable macro environment which was “a continuation of the financial crisis that has been rumbling on since 2008,” Elman added.

Noble reported a net loss of $17.5 million for the three months ended September, compared with a net profit of $157 million a year earlier, hurt by unrealized mark-to-market losses.

The result came weeks after U.S. agribusiness and trading firm Cargill Inc posted a 66 percent drop in quarterly profit.

Noble, which counts sovereign wealth fund China Investment Corp among its shareholders, has three business segments — agriculture, energy, as well as metals, minerals and ores.

It said its processing margins in agriculture remained under pressure, while below-average crop yields in the sugar business in Brazil and continuing counterparty defaults in the cotton industry had undermined the operating environment.

It added that its energy segment was hurt by the very sharp decline in the price of Certificates of Emission Reductions (CERs) or carbon credits during the quarter.

“Since the financial crisis of 2008, we have regarded the emissions trading system as being a luxury that the Europeans cannot afford, and as such have taken a cautious approach to the business,” Elman said.

“But the recent dramatic decline in the price of short-dated CERs - a maturity that we cannot hedge against - has meant that further writedowns are being made.”


Noble said last month that it was seeking to list its agriculture business on the Singapore Exchange, but warned that the process would be subject to market conditions.

The segment had a revenue of $5.7 billion in the third quarter, up 59 percent from a year earlier, but operating income from supply chain fell 70 percent. The operating income margin dropped to 1.20 percent from 6.32 percent a year ago.

“We announced some weeks ago that we are in the process of obtaining approval for an IPO of our agriculture business, Noble Agri,” Elman said.

“Progress is good and we believe that the market will be receptive to this initiative. The market reaction from potential investors has been very encouraging,” he said, adding that the company would release more details later.

Two sources told Reuters on Tuesday that Noble had added Citigroup and Goldman Sachs as bookrunners for the planned $700 million IPO of its agriculture business next year alongside JPMorgan .

For agribusiness, Noble is often compared with Singapore-listed Olam International and Bunge Ltd , whose shares are traded on the New York Stock Exchange. In the hard commodities segment, Noble’s largest rival is Glencore International PLC . (Editing by Saeed Azhar)

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