Noble Plays Where Puck Is

HONG KONG - May 10/07 - SNS -- Noble Group reported a net income of U.S. $43.817 million on revenues of $4,094.1 million for the three months ending March 31, compared to a net of $35.112 million on revenues of $2,791.2 million during the same three-month period last year.

In its statement to shareholders, the company railed against speculative trading activity in commodity markets. "We've recently seen some bizarre price behavior in our markets, mostly driven by the effects of excessive liquidity, which has resulted in some unwelcome speculation.

"We continue to be amazed at the level of price distortion, or you might even say contamination, that we are seeing in these markets. We have to admit, after a lifetime in business, that we find the dynamics of speculation a bit difficult to fathom. It reminds us of trying to help our children with their homework; when we look at what they are learning these days, we are impressed, though sometimes confused.

"What we do understand, and very well, are the essentials of supply and demand. They work. They give you the real picture. Speculation, on the other hand, is about sentiment and perception, rather than reality. In other words, if you want to gamble, that's your choice, but it's never going to be how we create a long term sustainable business strategy for Noble. Understanding market reality is the principle which will continue to see us through to long-term, sustained profitability."

Noble said physical demand for our goods continues to be strong and the total tonnages shipped is rising. To meet emerging demand, the company has focused on strategic investments aimed at "extending our control of the complete supply chain. . .

"Our Grain Division has been doing particularly well at executing this strategy – and it provides a good indication of where all our divisions are headed. They have the assets they need to profit from each point in the supply chain – from the farm fields to the kitchen stove.

"On another front, we've made a big step with the acquisition of a Brazilian sugar and ethanol plant which we announced in the first quarter. . . . which will enhance our capacity to deliver a product that will be in ever-greater demand not only in Brazil, but worldwide . . . ethanol."

Noble said its involvement with ethanol is part of an effort to focus on what is actually happening in the world instead of debating the economics of ethanol or the science of global warming and its possible impact on weather, crop production systems, and where people can live.

"As one of ice hockey's greatest players, Wayne Gretzky, once said: 'A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.' We are shooting for great, not good. While we are busy supplying the markets of today, we are also focusing on preparing to supply the markets of the future.

"Anyone who has read a newspaper or watched the news recently is aware of a couple of things. First, that global warming is happening and that man-made sources of greenhouse gases are responsible. Second, the public and politicians are gearing up to create new laws that will be aimed at curbing greenhouse gas emissions.

"Some folks may think that we have to wait for the inevitable regulations, or climate-based destruction to happen, before needing to act. But that's going to be too late. Even before the European Union's Emissions Trading Scheme for carbon credits was put in place, we had a carbon trading team ready to go to work. We have experienced some turbulence in this young market, but that's to be expected."