3 factors that badly hurt Noble's agribusiness segment

Agri margins slipped US$7/MT.

According to Nomura, Noble reported 57% lower adjusted net income y-y, led by negative agri margins (~USD-7/MT). MMO margins fell sharply y-y to ~USD1/MT.

Volumes were up in agri, stable in energy and down in MMO. Energy margins moved up to USD12/MT, lending support to overall performance.

Here's more from Nomura:

Agri was impacted by sugar losses (1Q not a harvest season), idle crush capacity in Argentina owing to lower bean volumes and port congestion in Brazil.

Energy's higher profitability was mostly from its coal business and MMO margins were down on build-out of new businesses like zinc etc.

1Q accounts for only 10% of consensus FY13F earnings estimates. Though 2Q should be better as sugar crushing has started/port situation isimproving, we still don’t expect any significant recovery as sugar utilisations would only peak next year, and sugar prices remain low. MMO margins may take some time to normalise and till then energy would have to subsidise for both agri/MMO.

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