Net income was $65.8 million in the three months ended June 30, compared with $62.8 million a year earlier, the Hong Kong-based company said today in a statement. Sales rose 13 percent to $23.6 billion. Noble shifted 72.3 million metric tons of commodities in the period, from 57.7 million tons a year ago.
“We continue to believe that we have grounds to be cautiously optimistic that our group returns have passed their low point,” Chief Executive Officer Yusuf Alireza said on a conference call today. “Especially if we start to implement commercial activation of recently announced partnerships.”
Noble is moving away from full control of commodity assets and instead favoring investments in groups that manage such businesses. The change means the trader can secure raw materials for resale without being committed to the running of a mine or oil field. That and the sale of control of its food division to China’s Cofco Corp. for $1.5 billion this year has freed more resources for new investments.
With the agribusiness due to be taken off its books once the deal with a Cofco-led consortium completes before the end of the year, Noble will be able to exceed its 20 percent target for return on equity through its energy and mining business, Alireza said.
That “bodes well for the returns that we can expect,” from the company’s “asset-light strategy,” he said.
Noble in July said it formed an energy venture with private-equity firm EIG Global Energy Partners LLC to invest in assets worldwide. The venture, Harbour Energy Ltd., will own and operate energy extraction and processing assets, with Noble the preferred buyer and re-seller of its products.
That added to Noble’s agreement in September with private-equity firm TPG to invest a combined $1 billion in X2 Resources, a company started by former executives of Xstrata Plc.
The latest quarterly result helped drive record first-half volumes and operating income from supply chains from continuing operations. Noble’s food unit showed substantial improvement, the company said.
Oilseed crushing facilities added in South America and the sourcing of more iron ore and ferroalloys from Mongolia, as well as zinc and copper from Africa and South America, helped Noble counter widening losses from supply-chain assets and lower operating income margin in the quarter. Total operating profit fell 29 percent to $277.4 million in the three months.
Operating margins for the energy business will improve in the second half of the year, from the second-quarter, and oilseed crushing in China may become profitable by the fourth quarter on holiday demand, Alireza said.
Noble, whose second-largest investor is sovereign wealth fund China Investment Corp., said that Cofco’s equity share in the group of investors taking control of its agribusiness will be 60 percent. Other investors include private-equity fund Hopu Investment, Alireza said.
The World Bank Group’s International Financial Corp. and other investors may join the Cofco-led “multinational” group, the Noble CEO said.
Noble fell 1.4 percent to S$1.37 at the close in Singapore before the earnings were released.
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