Rationalisation and re-aligning of businesses to focus on core franchises

Transcription

1 Results

2 Rationalisation and re-aligning of businesses to focus on core franchises 2 Sale of remaining stake in Noble Agri completed US$500 million rights issue completed Sale of Noble Americas Energy Solutions to Calpine Corporation completed European Power & Gas book sold Metals business downsized and repositioned Sold non-core assets related to loss making or low return businesses to release capital Cost reduced by flattening the organisational structure, rationalising businesses and headcount, and closing satellite offices Decreased debt and leverage ratios, and increased liquidity headroom

3 Underlying Performance Twelve Months Ended 31 December Resilience of franchise demonstrated by stability in volume of physical commodities delivered in Energy and Mining & Metals Segments Logistics volumes declined as a result of the focus on profitability and loss in volumes from the sale of Noble Agri Stable Volumes in Energy and Mining & Metals Segments (1)(2) (Million Tonnes) Energy and Gas & Power Segments earnings adversely impacted by conservative approach to liquidity management Mining & Metals Segment turnaround driven by successful realignment of businesses in an improved market Turnaround in Mining & Metals, Group Results Impacted by Conservative Liquidity Management (1) (Operating Income from Supply Chains, US$M) Gas & Power Energy Mining & Metals (101) (1) Adjusted for discontinued or to be discontinued businesses and other expenses (2) Excludes Corporate segment Logistics volumes. Excludes Gas & Power segment volumes measured in MWh

4 Underlying Performance (continued) Twelve Months Ended 31 December Headcount reduced by approximately 30% in One-time increase in SAO expenses, due to costs related to rationalisation and retaining key personnel. Capital raising initiatives and conservative approach to liquidity management resulted in a reduction in debt, decline in leverage and increased liquidity headroom. Excluding variable SAO expenses, current underlying run rate down more than 20% from 2015 levels (1). Headcount Reductions (Headcount) One-time Increase in SAO Expenses (2) Decreasing Leverage (Net Debt to Capital, %) Increasing Liquidity (Liquidity Headroom, US$B) 1,525 (SAO expenses, US$M) 55% , % Effects of headcount reduction and cost control initiatives to be reflected in 1H Dec Dec Dec Dec Jun Dec 16 (1) Refers to 2015 SAO expenses before adjustment for discontinued or to be discontinued businesses and other expenses (2) Adjusted for discontinued or to be discontinued businesses and other expenses

5 Consolidated Income Statement Summary Year Ended 31 December (US$M/Tonnes M) Tonnage (1) Revenue (1) 45,524 60,702 Operating income from supply chains, net (1) 808 1,148 Operating income margin (%) 1.77% 1.89% Profit/(loss) on supply chain assets (1) 212 (96) Share of profits & losses of joint ventures & associates (1) (84) (77) Total operating income (1) Other income net of other expenses 4 1 Selling, administrative and operating expenses (1) (599) (477) Profit before interest & tax (1) Net finance costs (1) (155) (169) Taxation (1) 66 (22) Adjusted net profit (1) (1) Adjusted for exceptional non-cash items and losses from discontinuing or to be discontinued businesses and other expenses. Refer to SGX results announcement note 1(a)(i)(A) for additional disclosure. Adjusted net profit for the year ended 31 December 2016 includes a US$291 million gain on sale of Noble Americas Energy Solutions ( NES ) in profit/(losses) on supply chain assets and NES underlying profit before interest and tax of US$114 million to date of sale on 1 December 2016.

6 Segment Results Energy 6 Oil Liquids The Oil Liquids franchise recorded strong volumes, with tonnage rising 6% year-on year as we continue to execute on term supply deals, pipeline flows and deliver product to our customers. However, profitability was significantly impacted by working capital constraints as we managed for liquidity, inhibiting the business ability to enhance margins by monetising the embedded optionality in the franchise. With significant progress in the Group s initiatives to build liquidity, we expect these constraints to moderate as we go into Energy Coal The Energy Coal business continued its solid performance on steady volume, maintaining our market leading position in the Asia Pacific seaborne coal market. Following the strong rally in 2H 2016, we expect the market to stabilise and reflect more of the supply and demand fundamentals to the benefit of our core physical merchant business. As the demand for coal shifts further into developing and emerging Asian economies, Noble is well positioned to benefit. Volume (1) (Million Tonnes) Revenue (1) (US$M) Profit Before Interest & Tax (1)(2) (US$M) 50, , (1) Adjusted for discontinuing or to be discontinued business and other expenses (2) Adjusted for exceptional non-cash items

7 Segment Results Gas & Power 7 Energy Solutions The sale of Noble Americas Energy Solutions ( NES ) to Calpine Corporation closed on 1 December Gas & Power The Gas & Power business is now comprised of two key franchises North America Gas & Power and Global LNG. The Global LNG franchise has been reorganised with a renewed focus, while the North American Gas & Power businesses continued its steady performance, despite credit and capital constraints. Non-OECD Asia is projected to be the fastest growing natural gas market and Noble is well positioned to benefit from this growth in demand, given our existing relationships and market position in the region. Volume (1) (Million MWh) Revenue (1) (US$M) Profit Before Interest & Tax (1)(2) (US$M) (1) Adjusted for discontinuing or to be discontinued businesses and other expenses segment results include US$291 million gain on sale of NES and US$114 million underlying profit before interest and tax to date of sale on 1 December 2016 (2) 2015 segment results adjusted for exceptional non-cash items

8 Segment Results Mining & Metals 8 Metals The Metals business was restructured to focus on Base Metals in Asia and the global integrated Aluminum franchise. In Aluminium/Alumina/Bauxite, we are focused on the vertically integrated supply chain, including Jamalco. In Base Metals, the business was focused on a measured build out of its business based on existing relationships in our key origination markets namely China, Mongolia and Central Asia with sales into South East Asia and the Middle East. Carbon Steel Materials Carbon Steel Materials achieved a significant turnaround in performance in compared to, as the business benefited from the rally in prices. The business successfully risk managed through the extreme price volatility, especially in the second half of Volume (1) (Million Tonnes) Revenue (1) (US$M) Profit/(Loss) Before Interest & Tax (1)(2) (US$M) , ,918 (212) (1) Adjusted for discontinuing or to be discontinued business and other expenses (2) Adjusted for exceptional non-cash items

9 Segment Results Corporate 9 The Corporate & Others Segment incorporates the Logistics business as well as the investments in our major associates and joint ventures including Yancoal Australia Limited ( Yancoal ). US$67 million of the 2016 total US$84 million (1) of the Group s share of losses of associates and joint ventures is included in the Corporate & Others Segment. Logistics Our Logistics business has focused on re-aligning its portfolio to focus on profitability over volumes and proactively minimize counterparty credit risk, given industry sentiment. This focus on profitability and the loss in volumes from Noble Agri led to a reduction in volumes, but underpinned a strong turnaround in the profit and loss contribution. Yancoal After the year end, Yancoal announced that it had entered into a binding agreement to acquire Coal and Allied from Rio Tinto. On completion, Yancoal would become Australia's largest pure play coal producer. (1) Adjusted for discontinuing or to be discontinued business and other expenses

10 Working Capital & Capital Structure 10 Working capital levels and credit largely stable post Q Trade & other payables decreased in Q following tightening of uncommitted unsecured bank lines ahead of May 2016 bank debt refinancing Following the completion of the rights issue and various capital raising initiatives, the Group is operating under a conservative capital structure with 84% of the balance sheet funded by long term debt and equity Working Capital (1) (US$ billions) Stable working capital through Capital Structure 31 Dec Dec % 36% 36% 49% % 43% 57% 35% (3.5) (3.4) (2.9) (4.7) (3.2) Reduction in payables 31 Dec Mar Jun Sep Dec 16 Inventories Trade & other payables Trade receivables Net fair value gains Prepayments, deposits & other receivables 21% Assets 27% Liabilities Cash Working Capital Long Term Assets 15% Assets 16% Liabilities Short Term Debt Long Term Debt Shareholders' Equity (1) 30 June 2016 and 30 September 2016 working capital levels include amounts related to Noble Americas Energy Solutions classified as assets and liabilities held for sale

11 Leverage & Liquidity 11 Net debt to capital at 42% as at 31 December 2016, compared to 55% as at 31 December 2015, in line with management s commitment to reduce leverage Liquidity headroom (1) increased to US$2 billion as at 31 December 2016 compared to approximately US$800 million as at 30 June 2016 Ample levels of readily available cash plus RMI, and liquidity headroom to cover debt maturing in 2017 Available Liquidity (US$ billions) Net Debt/Capital (2) % 52% 54% 47% 42% Adjusted Net Debt/Capital (2) 25% RMI plus Readily Available Cash Liquidity Headroom Adjusted Net Debt Bank Debt Due in Dec Mar Jun Sep Dec Dec 16 (1) Readily available cash and unutilised committed facilities (2) Capital = net debt + shareholders equity. Adjusted net debt adjusted for RMI

12 Moving Forward 12

13 Noble Group by the Numbers A leading global supply chain manager 13 London Stamford By the Numbers (1) : Houston Total Tonnage: 222 million tonnes Revenue: US$45.5 billion Oil Liquids: 115 million tonnes Dubai Hong Kong Singapore Energy Coal: 65 million tonnes (2) Gas & Power: 334 million MWh (3) Head Office Regional Hub Carbon Steel Materials: 25 million tonnes Chartering: 40 million tonnes Years in Operation: 30+ years Operating in 21 countries and 42 locations Oil Liquids Storage Capacity: 24 million barrels Vessels Chartered: 539 vessels with more than 100 vessels on the water at any time (1) For the year ended 31 December 2016 (2) Includes both principal tonnes and agency tonnes. Volumes disclosed in the Group s results are based on principal tonnes (3) Includes LNG. Adjusted for discontinuing businesses. Excludes Noble Americas Energy Solutions. MMBTU to MWh conversion based on market heat rates

14 Our Business Mix and How We Have Changed Focus on core franchises and key regions 14 Oil Liquids Gas & Power Global Asia US Metals Energy Coal Met Coal & Coke Iron Ore & Special Ores Energy Retail Prioritisation and Focus on High- Return, Market-Leading Franchises & Regions Global Americas Asia + EMEA Oil Liquids LNG Energy Coal Aluminum Gas & Power Base Metals Met Coal & Coke Iron Ore & Special Ores Crude oil Light ends Distillates Renewables LNG Bituminous coal Subbituminous coal Alumina Aluminum Bauxite Natural gas Electricity Copper Nickel Zinc Met coal Met coke Iron ore Chrome ore Manganese ore Operating in 21 countries and 42 locations maintaining product and geographic diversity

15 Cost Discipline Additional cost rationalisation efforts in 1H 2017 to underpin future profitability 15 Excluding variable SAO expenses, current underlying run rate already down more than 20% from 2015 levels (1) Additional headcount reductions in 1H 2017 will further reduce underlying run rate US$450 million SAO expenses target based on US$1 billion operating income from supply chains target Results from 2016 and new 1H 2017 cost initiatives to be seen in 1H 2017 Further Rationalisation of Headcount (Headcount) 1,525 Cost Control (2) (Selling, operating and administrative expenses, US$M) 599 1,050 < Subject to variable SAO expenses and relative to operating income from supply chains 31 Dec Dec 16 1H Target (1) Refers to 2015 SAO expenses before adjustment for discontinued or to be discontinued businesses and other expenses (2) 2016 adjusted for discontinued or to be discontinued businesses and other expenses

16 Priorities and Targets Targeting operating income from supply chains of c.us$1 billion and EBIT of c.us$550 million 16 Business Priorities Focus on commercial opportunities and invest in high return businesses. Estimated split of earnings across the business as follows Annual Earnings Target (US$M) 1,000 - Oil Liquids: 40-50% - Hard Commodities: 30-40% - Gas & Power: 10-20% 550 Implement and track various cost reduction initiatives Continue discussions with banks on refinancing of May 2017 maturities and trade finance support Maintain solid balance sheet and capital structure Ensure robust levels of liquidity Operating Income from Supply Chains EBIT

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