Noble Group Profit Rises Sevenfold as Commodity Shipments Surge

river port grain terminal timbues san lorenzo
River Port Grain Terminal,
Timbues San Lorenzo, Argentina, Image (c) Noble Group
By Yuriy Humber

Nov. 7 (Bloomberg) — Noble Group Ltd., Asia’s biggest commodity trader by revenue, said third-quarter profit jumped almost sevenfold as it shipped a third more goods.

In its first quarterly results since selling control of its food unit, the Hong Kong-based trade house said net income was $153.9 million in the three months ended Sept 30, compared with $22.9 million a year earlier. Noble shifted 71.6 million metric tons of commodities in the period, from 54 million tons a year ago, helping boost sales by 7 percent to $23.2 billion.

Noble sold a majority stake in its food division to China’s Cofco Corp. for $1.5 billion earlier in the year to free resources for its more profitable mining and energy businesses. In the last 14 months, Noble has put money in an oil venture with EIG Global Energy Partners LLC as well as a firm started by former officials from Xstrata Plc.

The profit surge “firmly endorses our diversification strategy,” Chief Executive Officer Yusuf Alireza said in a statement. “We have the strongest balance sheet in our history.”

Noble is broadly moving away from controlling commodity assets and instead favoring investments in groups that manage those businesses. The asset-light strategy allows it to focus on trading without the commitment of running mines, farms or oil fields.

For the first nine months of this year, Noble posted records for the volume of commodities shipped, at 196 million tons, and operating income from its supply chain, at $1.17 billion.

Equity Return

With the agribusiness off its books, Noble said in August it expects to raise its return on equity to more than 20 percent.

Noble’s return on equity in 2013 was 6.91 percent, according to the latest data compiled by Bloomberg, less than the two biggest trading firms of Japan. Japan’s largest trader of iron ore, Mitsui & Co., had a 12.03 percent ROE, while Mitsubishi Corp., the nation’s top importer of liquefied natural gas was at 9.3 percent.

Having weighed on Noble’s earnings last year, its reconfigured food unit handled record volumes over the quarter, revitalizing its profit margins.

Noble rose 0.8 percent to S$1.20 at the close in Singapore before the earnings were released.

Noble’s second-largest investor, the sovereign wealth fund China Investment Corp., in September cut its stake in the company to 9.4 percent from 13.8 percent.

(c) 2014 Bloomberg.