Noble: To report 3Q18 net loss despite strong commodity prices

U.S. one-dollar currency notes; taken September 2018.U.S. one dollar bills.

Noble Group warned on Monday that it expected to report a net loss of US$90 million to US$115 million for the third quarter, despite strong commodity prices, due to restructuring expenses, losses from discontinued operations and finance costs.

The troubled commodity trader said the underlying business results were positive, led by the metals, minerals and ores segment, with profit before interest, tax and restructuring expenses likely around US$20 million to US$35 million for the quarter. Operating income from supply chains was expected at US$40 million to US$55 million, it said.

“Global commodity prices have been strong over the first nine months of 2018, supported by both growth in demand and factors affecting supply such as production cuts and economic sanctions,” Noble said in the filing to SGX after the market close on Monday.

But it added that performance was hurt by continued constraints on liquidity and competitive trade finance as well as the restructuring expenses.

“The constraints are expected to be alleviated by the new trade finance facility to be made available upon the completion of the restructuring,” Noble said.

Restructuring expenses were around US$35 million and net finance costs and tax were around US$35 million to US$45 million in the third quarter, the commodity trader said. Noble has ceased to pay its existing senior debt, but it continues to accrue the interest and principal payments, it said.

The net loss from discontinued operations was expected at around US$55 million for the third quarter, including losses from the discontinued Global Oil Liquids segment after the sale of Noble Americas Corp. in January and a provision from the discontinued agricultural operations, which were disposed of in 2014 and 2015, Noble said.

Noble said it expected to report a nine-month net loss of around US$290 million to US$315 million.

The net losses have resulted in a negative net asset position of around US$1.1 billion as of 30 September, it said, but it added that the proposed restructuring should restore shareholders’ equity, Noble said.

Total cash and cash equivalents were around US$580 million as of 30 September, down from US$621 million at the end of the second quarter, mainly on restructuring expenses and higher working capital, it said. The third-quarter total included US$175 million in cash with a security agent as collateral for letters of credit under interim trade finance facilities, which was expected to be released on the proposed restructuring effective date, it said.

The troubled commodity trader’s restructuring proposal has taken a contentious and controversial route toward the finish line.


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