Thursday, February 28, 2013

Review of Noble FY2012 Results

Noble Group reported its full year results today, with net profit for the year up 9% YoY, from US$ 431 Million (FY2011) to US$471 Million. However, if you look closer, its Earnings before Interest and Taxes (EBIT) has actually decreased from previous year, down 11% YoY. The reason why net profit is up is due to the utilisation of its deferred tax assets from previous year, resulting in a tax credit, and hence a better net profits.

Overall working capital has also increased by some US$847 Million compared to previous year, resulting in a weaker cash flow from its operating activities for FY2012 as compared to FY2011. The management has attributed this due to the increasing segment of its energy business. More cash is also used to repay debts as the company focuses on deleveraging its debts. Net debt to capital has improved to 48.8% at year end.
Cash & Cash equivalents stood at US$751 Million as of FY2012 year end, much lower than previous year of US$1.5B. However, if we include the cash from the merger between the Gluocester Coal and Yancoal Australia, which they receive in Jan 2013, Cash equivalent would have been over US$1B.
Chairman Richard Elman has summarised the company's FY2012 results as being only "satisfactory" due to the headwinds in its agricultural business, which resulted in a lower confidence from retail investors for commodities. Moving forward, the Chairman is confident that Noble Group will perform better, with investment in Brazil, Africa and Russia starting to take off in 2013/2014 and also increasing global demand in its energy and agricultural business.
The company announces dividends of around US$0.0181, which is equivalent to about S$0.02 a share. That would present approximately 2% at current yield. For investors who are willing to hold for longer term, Noble looks good to accumulate at current price. I am currently vested and will be looking to add further more.

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