We are delighted to report to you again with our third quarter results. We have
over the last many years written to shareholders to explain “how we are doing”.
I must say “We are doing very well. Thank you.” In the past, when we reviewed
our performance we also tried to give you a sense of the future, and in looking
back, these indications have been reasonably accurate.
In June, we said that we thought our business would improve as some of our
investments and new businesses were starting to take shape. I believe this is
precisely what is happening, and hence we are excited about our future and
the new income streams. We’re also proud of our teams that produced these
results. They’ve worked hard to get us to this point, but we still expect morewe’re
constantly raising the bar.
We have had a very interesting quarter. First of all, the quarter was the best
quarter for sales and gross profit that the company has ever had, and that
certainly is a landmark.
Second, we finally concluded the rather long and drawn-out Gloucester/
Middlemount transaction. We are very pleased with the results. The
Gloucester share price (GCL AU) has performed very well subsequently.
(By the way Noble owns 6o% of the Gloucester which has a market capital
today approaching A$1.5 billion.)
There are a number of projects that we have concluded in the fourth quarter,
but which took a large amount of our time in the previous quarters. In
particular we concluded the Sempra Energy Solutions acquisition which has
now been renamed as Noble Americas Energy Solutions. This is a transaction
we are very proud of-it will give us the ability to further scale our energy
activities in US.
We also recently issued a US$350 million perpetual security, which is an
enormous compliment to the company -- very few companies have the ability
to secure such funding and certainly not under the terms and conditions we
achieved. This provides us with an opportunity to further increase our equity
capital base and at an attractive cost.
We have also been successful in securing a marketing agreement with Berau
Coal in Indonesia, which is a real benchmark transaction for Noble. Berau is
forecast to be one of the leading Indonesian coal producers, and we are very
excited about the opportunity to work with its management team for years to
come.
I could continue like this, but would urge you to review our just released
Management Discussion and Analysis as posted on our website. You’ll find
several pages of third quarter and post quarter corporate developments which
provide insight also to how we continue to grow.
Clearly running Noble is not like driving down the highway. We have our hills,
our turns and bumps, but somehow we seem to improve our skills just a little
bit every day. One good example is the progress in our IT systems which are
the foundation for the future growth of the company. We’ve made substantial
IT investments in our Oil and Gas activities to ensure we can manage the
business in a prudent and real-time basis.
As we continue to grow, there is one long term issue that we need to focus on,
and that is to ensure that we maintain our unique culture. When we started, it
was easy, there were only a few of us and we more or less had lunch every day,
so we could nurture the spirit easily. Clearly, as we have grown we realize the
need to integrate people into our culture and help them change their ways of
working to match that of Noble. Our senior management has done a good job
on this score and we will continue to employ significant resources in ensuring
we go all forward in the “The Noble Way”.
As we’ve often said “Our business is simple”. It is about getting the small things
right; making sure that the thirty tonnes of soybeans that the farmers’ lorries
deliver are properly tested for quality and moisture content; ensuring that the
latest piece of equipment is properly fitted; and that the documentation behind
each and every delivery is correct. We reckon that there are about forty things
that can go wrong in even a relatively straightforward transaction. We aim for
perfection each and every time.
“Hands On” is how we have described ourselves in the past and the phrase
continues to be the essence of everything that we do.
It is this attitude - which can also be summarized as “don’t wait for someone
else to do it for you” - that has enabled us to grow and to meet the high
expectations of our business partners. We stress accountability and
responsibility in our staff and this is an important part of our culture. Of
course we sometimes hit speedbumps and get things wrong, but we’ll look to
re-align our efforts and move forward with more determination to succeed.
The importance of our culture really came home to us when several of your
management team spent a week or so in early October officiating at the formal
opening of our new berth in the Brazilian bulk port of Santos and at our new
world class crushing plant at our port facility at Timbues in Argentina.
It was very gratifying to see first-hand that our colleagues who made these
projects possible carried the same sense of ownership and commitment that we
had when we were doing our first transactions all those years ago. The same
attitude was also quite apparent when we visited our new Brazilian sugar mills
on the same trip.
This sense of ownership has been deliberately fostered across the group in
the last couple of years as we added entire new business groups - from the
coal investments in Australia and Indonesia to our sugar milling operations
in Brazil to building out an oil, gas and power business from the ground up,
within which we have also now built a significant storage and distribution
operation in the American Midwest.
We must also recognize the improvement in our risk management efforts
especially since we are seeing the re-appearance of extreme price volatility in
commodity markets. We have never run Noble on a day-to-day price basis, and
we must ensure that whatever we do allows Noble to continue to operate for a
long period of time, riding out the volatility.
At the end of the day, we originate products from low cost locations while
making sure that our actual cost in delivering those products to the most
attractive destination markets is as low as it can be. Whether that involves
mining coking coal in Australia, crushing soybeans in Argentina or having
the fastest loading equipment in the port at our facility in Santos, it is this
attention to the basic economics of our business that means we are prepared
for whatever is thrown at us.
However, we must remain mindful that the fall out from the 2008 financial
crisis really has not vanished so easily.
We certainly do not wish to bet our future on the fact that the current low
interest rates will persist and consequently we have prepared our balance sheet
in case rates rise. That is why your company, with over US$2 billion of cash
on its balance sheet, and an emphasis on long term committed funding, is well
prepared for whatever the future holds.
Trading conditions remain good and I can assure you that we are in better
shape than ever to face the markets going forward led by a management team
that is experienced, strong and committed, and passionate.
At the end of the day, in trying conditions, this is by far and away the best
quarter we have ever had. We are not yet ready to open a bottle of champagne,
but certainly have a bottle on standby. As the best is yet to come.
In closing, we also would like to sincerely thank our employees, clients, banks
and shareholders for their continued strong support.
Richard Samuel Elman
Non-Executive Chairman
9 November 2010
The Board of Directors of Noble Group Limited presents
below the unaudited consolidated financial results for the
third quarter and the first nine months of 2010 together
with those of corresponding periods for 2009.
The Group reported a record revenue and gross profit
in third quarter 2010 of US$14.9 billion and
US$442 million, respectively, compared to
US$8.4 billion and US$315 million in third quarter
2009. The Group also reported a record revenue of
US$39.3 billion in the first nine months of 2010,
compared to US$21.6 billion in the corresponding
period of 2009.
Profit from operating activities for the first nine months
of this year was US$428 million, compared to
US$540 million in the first nine months of 2009.
Net profit for the first nine months and third quarter
of 2010 equaled US$358 million and US$157 million,
respectively, compared to the US$471 million and
US$132 million in the corresponding periods of 2009.
The profit from operating activities for the nine months
2010 included a profit of US$65 million from fair value
gains on an equity option while that for 2009 included
US$154 million from the revaluation of a pre-existing
interest in Gloucester Coal and the negative goodwill arising.
The Group’s balance sheet remained strong with
US$2.2 billion in cash while cash plus near cash
(trade receivables and inventory) totaled US$6.9 billion.
(unaudited) (unaudited)
Nine months ended Three months ended
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