Noble seeks new prizes to satisfy China needs
The cash-rich raw materials merchant and logistics firm is looking for assets
The Noble Group intends to stay on the acquisition trail this year to meet the growing global demand for raw materials and the transport services that bring those goods to market, according to chief executive Richard Elman.
The Singapore-listed raw materials and logistics firm yesterday said its net profit soared last year to US$286.14 million from US$61.25 million in 2003. The cash-rich firm saw sales increase to US$8.62 billion from US$4.39 billion after strong contributions from all sectors except its grains division.
'Obviously we are delighted with the results,' Mr Elman said. 'The company is starting to benefit from 20 years of hard work and a turn in the demand side of the commodities business.
'For the past 20 years, [the commodities business] has been in a deflationary, disinvestment mode. There have been some small pockets of growth, but suddenly it has all come together.
'We are looking around for assets to purchase.'
He estimated that Hong Kong-based Noble had US$350 million cash on hand. 'We have a lot of cash on the balance sheet so we are in a good position to continue to grow this company.'
Noble will pay out just over US$70 million in a cash dividend this year, 460 per cent higher than last year, pending shareholder approval.
The firm's logistics division, which controls its vessel-chartering and fleet management services, contributed close to 46 per cent to gross profit for the year, or US$242.8 million. Mr Elman singled out logistics and Noble's energy unit - which doubled its contribution to gross profit to US$113.6 million - as high achievers.
Its grains business was dealt a major blow in May when China suspended imports of Brazilian soya beans after finding evidence of fungicides. The division's gross profit fell to US$2.5 million last year.
However, Mr Elman said he remained bullish on the prospects for the China market, where up to 50 per cent of Noble's earnings came from last year.
'The implied demand for steel [in China] could be as high as 340 million tonnes, which means they will have to produce as much as another 40 million tonnes of steel this year,' he said.
'I find it difficult to see a slowdown in that economy. They have an inexhaustible supply of labour, a low-interest rate environment - all the stars are lined up that we will see another two to three very strong years.'