Aug. 8 (Bloomberg) -- Noble Group Ltd., Asia’s largest commodity trader, posted its third straight drop in quarterly profit, dragged down by a loss at its agricultural business.
Second-quarter net income plunged 68 percent to $62.8 million in the three months ended June 30 from $194.8 million a year earlier, the Hong Kong-based company said yesterday in a statement. Sales rose 5 percent to $25.3 billion.
The agricultural unit, which posted a $53.7 million loss related to supply chains in the quarter, was affected by logistics issues in Brazil and low sugar prices, Noble said yesterday. The division trading in aluminum, copper and other metals recorded an 86 percent surge in operating income to $55.5 million as Noble expanded to nickel, bauxite, specialty metals and ores.
“We have continued to execute our strategy, despite tough market conditions,” Chief Executive officer Yusuf Alireza said in a separate statement yesterday. “However, the agricultural business currently remains a substantial drag on group earnings.”
The stock, listed in Singapore, fell 0.5 percent to 91.5 Singapore cents, before the announcement. The shares have slumped 21 percent this year, making them the worst performers on Singapore’s benchmark index.
Revenue from the energy business was little changed, while income from supply chains gained 12 percent in the quarter as Noble continued to source more coal and added new hires to its oil and gas business.
Noble may see some delayed benefits from the weakness of the Brazilian real due to its currency hedging policy, the company said yesterday. The weaker real “is structurally positive for the sugar industry in Brazil,” it said.
Noble’s sugar mills in the country, which will be operating at full capacity next year, won’t generate attractive returns unless sugar prices rise from recent levels, it said in the statement. Sugar has slumped 15 percent this year.
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