Why Noble should brace itself for a slow recovery in agriculture business

Even though profits hit US$24m.

According to DBS, excluding US$65.8m loss on supply chain asset, FY13 core profit fell 34% y-o-y to US$309m (including > U$90m loss from associate Yancoal), in line with expectations. 

4Q13 net profit posted a marginal improvement, on both y-o-y and q-o-q basis, aided by low tax rate.

Here's more from DBS:

Agriculture segment reported a sequential increase in operating profit to US$24m (from US$14m in 3Q), though recovery pace was slower than expectations.

Efficiency at the Brazilian sugar mills are improving as crush throughput is ramped up, which
totaled 13.2mt in FY13 (near target of 13.6mt).

Energy segment was steady. MMO was the star performer in 4Q, with operating margins expanding by 0.5ppts y-o-y and 0.8ppts q-o-q to 1.3%.

Turnaround takes time. Noble is heading in the right direction, focusing on operational efficiency and balance sheet strength, though efforts may take time to bear fruit.

The group remains confident to crush a minimum of an additional 2mt of cane in 2014 despite the recent drought in Brazil, which has led to an increase in sugar prices lately and is positive for Noble.

Its positioning in the coking coal segment has been enhanced by the successful merger between Cockatoo Coal Ltd and Blackwood Corp. In Iron Ore, the group has been restructuring its origination network away from India, which was its major supplier before the export ban.