The commodity trader enjoys record first-half earnings and remains optimistic Diversified commodity trader Noble Group posted a sixfold increase in interim earnings yesterday, despite China's efforts to cool a racing economy which depressed global sales of industrial commodities. The Hong Kong-based company's net profit rose 556 per cent to a record US$126.3 million in the first half as global demand for raw materials and transport soared before the central government applied the brakes in the middle of the second quarter. Gary Mize, the group's chief operating officer, said the result was particularly satisfying because historically less dominant commodities and regions within the company's portfolio had compensated for the 'six-week fall-off' in mainland demand for iron ore. 'It was gratifying to see those businesses pay off when we had the downturn in China,' Mr Mize said. 'We had a slowdown in industrial raw materials from the end of April through to May and the freight [transport] market kind of followed that down. 'But since early June we've seen a pretty good lift in our activities.' Interim revenue for the Singapore-listed firm, which charters more than 600 ships a year to transport the commodities it sources, more than doubled to US$4.31 billion. Noble last year relied on China for about 25 per cent of sales and almost 86 per cent of net profit, according to a report last month from Japanese trading house Nomura. The central government's austerity measures sent a chill through the freight transport markets in the second quarter and it affected Noble's logistics arm, which generates about 7 per cent of sales but leads all divisions with a profit margin of about 17 per cent, according to Nomura. The bank early last month projected a full-year profit of US$182.5 million for Noble, a figure it may now want to revise. The Baltic Dry Freight Index, an average of indices for different sizes of vessels, lost more than 50 per cent of its value from late February's high of 5,536 to a low of 2,622 on June 22 before recovering to close at 4,100 this week. Mr Mize said freight rates were likely to remain volatile in the short term, but he expected consistent global demand for raw materials to influence an overall positive trend. 'I think the slope is definitely going to be north and I don't think you'll see the same kind of spikes or slopes we had leading up to the first quarter this year,' he said. Demand for dry bulk transport is about 1.5 billion tonnes a year, with iron ore and coal each comprising about 33 per cent of the market. The company's record first-half earnings could have been even larger had it not been caught in the middle when China in May suspended imports of Brazilian soyabeans after finding evidence of fungicides. 'We really took it on the chin in our soyabean operations and recorded a loss in this business line of slightly more than US$25 million for the period,' chief executive Richard Elman said. 'An unforeseeable disconnect in the applications of certain quality standards ... between China and Brazil, highlighted the current inflexibilities inherent in the Chinese import processing system.' Mr Mize said barring a 'blowout' in crude oil prices or 'some catastrophic event', he liked Noble's chances of extending its positive result to the second half. 'We are extremely upbeat about our performance prospects,' he said. 'The future looks good for us.'