Noble Group Reports 84% Tumble in Profit; CFO Stepping Down

  • CFO Van der Zalm steps down for health reasons, company says
  • Paul Jackaman to become acting group chief financial officer

Noble Group Ltd., the commodity trader battling criticism of its accounting methods and tumbling raw-material prices, reported an 84 percent drop in quarterly profit as markets remained difficult, and said its chief financial officer has stepped down.

Net income fell to $24.7 million in the three months to Sept. 30 from $153.9 million a year earlier, the Hong Kong-based trader said in a statement on Thursday. Sales dropped 20 percent to $18.7 billion, Noble said. Tonnages handled were a record, margins rose and the company said that cash flow from operations turned positive in the quarter.

CFO Robert van der Zalm has stepped down for health-related reasons, according to a separate statement on Thursday. He’ll take on role of vice chairman of finance, based in London, and Paul Jackaman, CFO Asia, will take on the role of acting group CFO.

Noble Executives led by Chief Executive Officer Yusuf Alireza have parried attacks from a group calling itself Iceberg Research and short-seller Muddy Waters LLC that the company’s accounts lack transparency. Noble has sought to cut debt, focus on its most profitable businesses and generate positive cash flow to restore investors’ confidence. While the Singapore-listed stock remains this year’s worst performer on the Straits Times Index as slumping commodity prices put off some investors, the shares rebounded last month.

‘Been Tough’

“We are spending an increasing amount of time ensuring that we run our existing businesses as profitably as possible,” Alireza said in a statement. “While the operating environment has been tough, and even more unpredictable than usual, it is this very change and uncertainty that has enabled us to re-position the business.”

The shares lost 2.9 percent to 50 Singapore cents on Thursday before the results statement. Noble rose 22 percent last month, the most since May 2008, as the company got fresh funding. The stock is 56 percent lower this year.

The mining and metals unit had a loss of $72.1 million in the quarter from a loss of $65.2 million in the same period a year earlier, according to the company, which said its share of losses from joint ventures and associates was $65.7 million from $20.2 million. Profit from the energy business rose to $143.4 million from $27.8 million from a year earlier.

Cash Flow

“We achieved the group’s target of generating positive cash flow from operations early, generating $318 million in positive cash flow from operations in the quarter,” it said.

Iceberg, a previously unknown group whose members are anonymous, has said Noble uses aggressive interpretations of accounting rules to inflate the value of assets and contracts. The company repeatedly denied the allegations, and Alireza said last month he should have been more forceful in pushing the trader to boost transparency.

In August, Noble published a report by PricewaterhouseCoopers LLP saying its accounting practices complied with international rules in valuing long-term contracts. It also organized an investor meeting in August at which Noble set a target to raise operating profit to more than $2 billion in three to five years.

The Bloomberg Commodity Index collapsed 29 percent in the past year and fell to a 16-year low on Wednesday as the slowdown in China’s economy cut demand from the biggest user of metals to grains and compounded surpluses.

Before it's here, it's on the Bloomberg Terminal.