Noble Group sees Q4 profits drop by over $240 million

28 February 2012

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28 February 2012 | Adam Leach

Commodity trader Noble Group has reported a drop in profits for both final quarter and full year after continued volatility and a challenging trading environment, according to its results.

The group reported significant declines for both the fourth quarter and the full year as profit margins were slashed in half across the business. Net profit for the final quarter was down from $247.5 million (£156.2 million) to $105.7 million (£66.7 million) for the quarter with net profit margin slashed to 0.53 per cent from 1.42 per cent. For the full year, profit dropped from $605.6 million (£382 million) to $431.3 million (£272.2 million) with margins again closing from 1.07 per cent to 0.53 per cent.

The group was hit particularly hard in its agriculture and its metals, minerals and ores (MMO) operations. Full-year operating income margin in its agriculture sector tumbled from 6.24 per cent to 2.6 per cent, resulting in a reduction in operating income from supply chain from $759.4 million (479.2 million) to $476.5 million (£300.7 million). In the MMO sector, margin dropped from 4.25 per cent to 1.04 per cent and income from $314.3 million (£198.3 million) to $114.2 million (£72.1 million) for the full year.

Richard Elman, chairman and acting CEO of Noble Group, said: “Without producing a tedious shopping list of the specific events and the subsequent disruptions that hit every serious player in our industry in 2011, suffice it to say that the year had even more than its fair share of ‘unknowns’ and ‘bumps in the road’.”

The group did report record yearly revenue of $10.9 billion (£6.9 billion), up from $7.4 billion (£4.6 billion). However, as its income margin dropped from 4.25 per cent to 1.04 per cent, the overall profitability of the group dropped.

Elman has been filling in as CEO at the group since last November, when Ricardo Leiman resigned after the company reported its first loss in more than 14 years. Earlier this month it was announced that Yusuf Alireza will take on the position from April 2012, joining the group from Goldman Sachs where he was co-president of Asia and a member of the global management committee. As reported by SM, William Randall has also been appointed as head of hard commodities and given a seat on the board.

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