NOL posts widening first quarter loss to US$254 million from $10 million
SINGAPORE's Neptune Orient Lines (NOL) has posted a first quarter net loss of US$254 million against last year's $10 million loss in the same period, drawn on $2 billion in revenue, a decline of four per cent. Friday, 11.May.2012, 02:48 (GMT+3)
SINGAPORE's Neptune Orient Lines (NOL) has posted a first quarter net loss of US$254 million against last year's $10 million loss in the same period, drawn on $2 billion in revenue, a decline of four per cent.
The NOL group, which owns APL, its principal container shipping business, blamed high fuel costs and low freight rates in container shipping for the poor quarterly performance.
But NOL also said that it achieved $100 million in cost savings in the first quarter and it was on track to achieve $500 million more throughout the year, to be won though using less fuel and improving operational costs.
NOL is also undertaking an organisational restructuring that will result in an additional annual savings of $70 million from 2013 onwards. The company said that its organisation structure around the world will be streamlined to shorten decision cycles.
NOL's supply chain management business, APL Logistics, reported a seven per cent increase in first quarter revenue. Core EBIT (Earnings Before Interest and Taxes) in the logistics business was $13 million.
"There were positive signs in the first quarter - the freight rate increases in March and growth in the logistics business," said NOL Group CEO Ng Yat Chung. "But we must continue to aggressively manage our operating costs, and streamline our organisation for greater efficiency."
Revenue per FEU declined seven per cent on lower rates. Bunker increased from US$523 a tonne in the first quarter of 2011 to $684 a tonne a year later. APL reduced fuel consumption by 75,000 tonnes even though overall cargo volume increased four per cent in the first quarter.
"Rates have been moving up since March, but not yet enough to offset the high cost of fuel," said APL president Kenneth Glenn. "Much more remains to be done to increase rates and manage down expenses."
APL Logistics reported first quarter 2012 revenue of US$394 million. Contract Logistics revenue increased 15 per cent mostly because of a strong demand for rail and land-based services from automotive customers.
APL Logistics' Core EBIT declined 38 per cent from the first quarter of 2011 due to higher operating and technology costs related to growth initiatives. "We increased revenue and sustained profitability despite economic uncertainty in key markets," said APL Logistics president Jim McAdam. "Our emphasis remains on investing for profitable growth."