Noble’s Elman prepares CEO succession
Billionaire Richard Elman said that he will soon install a new chief executive officer at Noble Group Ltd as the 71-year-old founder and chairman of Asia’s biggest commodity supplier prepares to ease his managerial control.
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Founder promises proper succession management
Bloomberg
17 January 2012
Billionaire Richard Elman said that he will soon install a new chief executive officer at Noble Group Ltd as the 71-year-old founder and chairman of Asia’s biggest commodity supplier prepares to ease his managerial control.
‘I expect some other management changes that will allow me over the shortest period of time to take life a little bit easy,’ Mr. Elman said in an interview on Bloomberg TV’s Asia Edge. ‘It’s necessary for me to do it, and I’d like to do it, but we will get a proper succession management in place before that. I promise that to myself and all the shareholders.’
Mr. Elman’s successor will inherit a company that has grown into Asia’s biggest listed commodity trader by sales in 25 years, overtaking century-old rivals in Japan including Marubeni Corp. Noble’s rapid growth over the last decade had also made it ‘a little bit lazy’ as the company posted its first quarterly loss in 14 years in November, Mr. Elman said.
‘We just have to shape up and deal with the situation,’ said Mr. Elman, a former scrapyard worker who set up Noble with US$100,000 in savings in a small Hong Kong office. ‘Everybody just has to be a little more cautious, a little more alert.’
Noble shares declined 1.8 per cent to $1.110 in Singapore. The stock, down 1.3 per cent this year, fell 48 per cent in 2011, compared with a 17 per cent drop in Singapore’s benchmark index.
Management changes at Noble follow a turbulent succession planning period since 2010.
Mr. Elman became acting CEO in addition to his chairman’s role after CEO Ricardo Leiman quit on Nov 9, the day that Noble announced a US$17.5 million quarterly loss. Mr. Leiman’s departure followed those of executive chairman Tobias Brown, senior executive vice-president Peter James O’Donnell and chief financial officer Stephen Jeffrey Marzo, all within 12 months.
The loss, due to underperformance in the cotton and carbon credit markets, threw Noble into a ‘major review’ of its businesses to improve profitability, the company said on Nov 9 in a statement. Standard & Poor’s placed the company on credit watch with negative implications on Nov 11, saying that Noble’s financial strength has ‘weakened’, and diminishing cash flows leave it with a higher leverage than appropriate to its ‘BBB-’ rating. ‘BBB-’ is the lowest investment grade.
‘I believe this is an issue of the past,’ Mr. Elman said in a separate interview yesterday with Bloomberg News. ‘We continue on a daily basis to strengthen the balance sheet, to improve the cash flow, to improve all the various ratios.’
Noble had close to US$1.8 billion in cash and in excess of US$5.5 billion in committed credit lines and cash at the end of September and that amount has subsequently increased, Mr. Elman said yesterday. The company, part-owned by China’s sovereign wealth fund, is not in danger of violating any borrowing contracts, he said.
Noble’s business is in a ‘good shape’, and it is expected to grow this year amid tough market conditions, he said. Of the 23 analyst recommendations for the company’s stock, 15 are ‘buy’, five ‘sell’, and the rest are ‘hold’, according to data compiled by Bloomberg.
The person who will take over the management will need to act as a real leader, Mr. Elman said.
Yusuf Alireza, the former Asia-Pacific co-president of Goldman Sachs Group Inc, was negotiating with Noble to take over as chief executive officer, The Wall Street Journal reported on Nov 14, citing an unidentified person familiar with the matter.
Mr. Alireza, 41, was a long-term target for Noble and was due to leave the US bank after 19 years’ service, the newspaper said.
Mr. Alireza, who joined Goldman’s fixed-income research group in New York in 1992, held positions in fixed-income sales and hedge fund sales and became a partner in 2004. He moved to Hong Kong in 2008 to run the securities division in the Asia-Pacific region.