Noble rides out volatility to post 8pc profit growth

PUBLISHED : Friday, 12 August, 2005, 12:00am
UPDATED : Friday, 12 August, 2005, 12:00am

Global commodities trader and transport firm the Noble Group rode out an unpredictable first half to post an 8 per cent rise in earnings, despite China's move to ease growing demand for steel products.

The company booked an interim net profit of US$137.3 million as sales rose 39 per cent to US$6 billion.

Chief executive Richard Elman said Noble would continue to look for acquisition targets to expand its share of the global trade in raw commodities, saying the 'long-term growth trend is intact'.

'We had a difficult second quarter. There were a lot of changes, particularly in China. There was a lot of volatility in the commodities market, which made it difficult for our customers to make reasonable predictions for the raw materials they needed,' Mr Elman said. 'And it appears the situation could last for the immediate future.'

The market volatility, slowing demand and falling charter rates for its vessels squeezed net margins, falling more than 20 per cent to 2.3 per cent.

Noble described the performance of its metals, minerals and ores division - which contributed 31 per cent of interim sales - as 'reasonable, faced as it was with some difficult market conditions'.

Mr Elman cited Beijing's intervention to cool the country's steel industry and the cancellation of tax rebates on the import of downstream steel and aluminium products as factors that made forecasting difficult for its clients.

'Oil is also a problem,' he said. 'Too much of its price is not driven by supply and demand, which is problematic. Having said that, if oil was US$35 a barrel, I would be even more concerned because it would mean all the economies had gone to hell.'

Its energy division accounted for 38 per cent of sales, or US$2.3 billion.

Noble said it would start to focus much more on 'long-term positioning, rather than on short-term profit'.

It started carbon-credit trading last month - anticipating opportunities from concerns about global warming and climate control - and is looking at possibilities for growth in non-fossil fuel industries.