Azernews.Az

By Bloomberg

Noble Group Ltd. reported a 30 percent drop in first-quarter profit as Asia’s biggest commodity trader contended with waning demand and losses at its units and ventures.

Net income fell to $107 million in the three months ended March 31 from $152 million year earlier, said the Hong Kong- based company, whose accounting practices have been criticized by research companies including anonymous group Iceberg Research and short-seller Muddy Waters LLC. Revenue fell 7.3 percent to $16.6 billion, Noble said in a statement.

Noble posted its biggest quarterly loss on record in the last three months of 2014 after taking a $438 million writedown, including charges on assets scrutinized by Iceberg. Noble founder Richard Elman rejected all allegations of impropriety and said at the company’s annual general meeting on April 17 that they will confront their critics in court.

“Nothing we have done has violated accounting rules,” Elman, who is now chairman, told shareholders at the meeting.

The company said on Tuesday it received commitments from a syndicate of banks for an unsecured revolving-loan facility amounting to $2.25 billion.

Profit in the quarter was impacted by $72 million of losses as part of Noble’s share in companies including unit Noble Agri Ltd. and associate Yancoal Australia Ltd. Noble had taken a writedown of more than $200 million on the value of its Yancoal stake, the asset that had drawn particular scrutiny from Iceberg.

Noble shares tumbled 26 percent since Iceberg issued its first report on Feb. 15. The shares failed to recover even after the company rebutted the allegations and sued Arnaud Vagner, a former employee it claims to be behind the reports, for conspiracy to injure the company by anonymously spreading false and misleading information. The stock jumped 4.1 percent at the close in Singapore on Tuesday, the most in a month.

Fair-Value Gains

While Noble said its fair-value gains fell to $4.17 billion in the quarter, the most obscure portion of those earnings, known in accounting jargon as Level 3, increased almost $100 million to $1.14 billion in the period.

The company said last month it will make its financial reports more transparent when it releases its first-quarter results. The announcement today was made two days earlier than scheduled.

“Investors are hoping the company would reveal more information,” Nicholas Teo, an analyst at CMC Markets in Singapore, said by phone ahead of the results announcement. “There’s heightened concern about the company’s outstanding debts following a jump in its credit default swaps.”

Credit default swaps on Noble’s five-year U.S. dollar- denominated notes climbed to a three-year high in March.

The balance sheet continues to be “lowly geared” by historic and industry standards as the company re-deploys the $3.3 billion received from the sale of Noble Agri, Noble Group said in the statement. It has about $1 billion of debt due this year, according to data compiled by Bloomberg.

Short interest on Noble Group climbed 3.4 percent of the shares outstanding as of April 30, the highest since May 2015, according to Markit Group data compiled by Bloomberg. Muddy Waters, the research firm founded by short-seller Carson Block, said on April 8 it has taken a short position in the company as it questioned its cash flow and management.

Short selling is the sale of stock borrowed from shareholders. People who sell short hope to profit by repurchasing the securities later at a lower price and returning them to the holder.