Debt laden commodities trader Noble Group Ltd warned Monday of a third-quarter loss of up to US$1.25 billion and announced the sale of its US oil-liquids business to Vitol Group BV for US$582 million.
Debt laden commodities trader Noble Group Ltd warned Monday of a third-quarter loss of up to US$1.25 billion and announced the sale of its US oil-liquids business to Vitol Group BV for US$582 million. Noble is listed in Singapore (SGX), while Vitol is the world’s largest independent oil trader.Noble’s oil liquids unit, was one of the largest traders of crude and refined oil products.
Nobel to focus on hard assets, freight and LNG
Noble has been treading water since it was caught massively long commodities in a falling market which led to a ratings downgrade, From there there were allegations of irregular accounting practices. The sale ofof Noble’s oil liquids unit, follows the sale in July of its US gas and power unit to rival Mercuria Energy America Group Ltd. Mercuria has been aggressive in building its assets base having bought JPMorgan’s commodity units a few years back.
Nobel Earnings Warning
Noble expects a total net loss in the quarter ending Sept. 30 of between US$1.1 billion and US$1.25 billion. This follows a loss of US$1.75 billion in the second quarter. What surprises many is many commodities have been rising in Q317, oil is at it’s best levels, Copper is at three year plus highs as have some of the other industrial metals. One is left to speculate on poor hedging or forced selling.
“The operating environment continues to be challenging for the group and this impacted performance in [the third quarter of] 2017,” Noble said.
The Group’s operating results continue to be adversely impacted by conservative liquidity management and constraints placed on the Group’s access to trade finance lines, as mentioned above.
Noble’s shares were halted on Friday and upon resumption of trading they fell more than 10 percent to S$0.34, the stock is down over 78 percent this year.
Noble has been forced to focus on coal and metals trading with it’s now core freight and liquefied natural gas LNG units. With the sale Nobel will cut a further 500 employess to just 400.
“Noble Group (SGX: CGP) is a leading supply chain manager: we buy physical commodities and transform them into customised, consumable products that meet the requirements of our customers through
(1) our logistics and transportation services
(2) our price risk management and hedging services
(3) our processing and blending capabilities and
(4) our structured and trade financing solutions.”
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