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UPDATE 1-Noble Group swings to small profit in 2016, cuts debt
February 27, 2017 / 11:02 AM / 7 months ago

UPDATE 1-Noble Group swings to small profit in 2016, cuts debt

* Some units operated below potential due to capital constraints

* Posts full year profit of $8.7 mln vs huge loss year ago (Adds details from results)

By Anshuman Daga

SINGAPORE, Feb 27 (Reuters) - Noble Group Ltd reported a net profit of $8.7 million for full-year 2016 versus a huge loss in the previous year when the Singapore-listed commodities trader restructured its business operations, and it outlined further cost cuts for this year.

The Hong Kong-headquartered company is slowly recovering after the restructuring, and is cutting debt and boosting liquidity amid a long-term downtrend in commodity prices. In 2015, it reported a net loss of $1.67 billion, its first in nearly two decades.

“Management continues to pursue the same goals that we laid out previously - to rationalise low return or loss making businesses while devoting resources to those core businesses in which we have a competitive advantage and where we expect to see continued strong returns over a cycle,” Noble said in a statement on Monday.

Noble’s shares have jumped by about a third this year but are still down about 70 percent since mid-Feb 2015 when its troubles started as its accounts were questioned by Iceberg Research.

This sparked a dramatic collapse in its share price and stoked ratings agency downgrades, forcing a sale of its assets and a fund raising to allay financing worries in a brutal commodities market. Noble has stood by its accounts.

Noble’s revenue declined 30 percent to $46.5 billion last year, with some of its businesses operating below their earnings potential due to capital constraints. Net debt to capital fell to 42 percent from 55 percent a year ago. It reported operating income from supply chains of $670 million and set an annual target of $1 billion for 2018-19.

Citing sources, Reuters reported this month that China’s state-owned Sinochem was in early talks to take an equity stake in Noble. Noble subsequently said it was holding talks on a possible strategic investment in the firm but did not give details of the party it was involved with.

On Monday, Noble said it had no update to offer on its talks. (Reporting by Anshuman Daga; Editing by Muralikumar Anantharaman)

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