Container shipping and logistics giant Neptune Orient Lines (NOL) today reported a net loss of US$67 million for the first half of 2011 compared to a US$1 million net profit in the same period a year ago. The group said it lost US$57 million in the second quarter of 2011.
NOL reported a 9 percent revenue increase in the first half of 2011 to US$4.595 billion. It announced a Core EBIT (Earnings Before Interest and Taxes) loss of US$28 million.
NOL said first half 2011 results were affected by higher operating costs, especially for fuel, and declining freight rates. It added that its supply chain management business, APL Logistics, increased revenue and Core EBIT.
"Conditions are challenging throughout the shipping industry," said NOL Group CEO Ronald D. Widdows. "In this environment we are working aggressively to bring down costs while keeping our assets well utilized."
NOL's Liner Shipping business – APL – reported revenue of US$4 billion in the first half of 2011. That was up 7 percent from a year ago. Volume increased 8 percent. Revenue per FEU (Forty-Foot Equivalent Unit) declined 3 percent, mainly due to lower freight rates in the Asia-Europe Trade. Vessel utilization in the first and second quarters of 2011 was 92 percent and 91 percent respectively.
"Rate pressure, coupled with a 23 percent year-on-year fuel price increase in the first half of 2011, negated the benefit of higher volume," said APL President Kenneth Glenn. "Our job now is to accelerate revenue growth while managing down costs in every aspect of our business; from terminal operations to the way we procure all other services."
APL Logistics – NOL's supply chain management business – increased revenue 18 percent in the first half of 2011 to US$682 million. Core EBIT increased 22 percent from 2010 to US$33 million. The increases were attributed primarily to gains in Contract Logistics, which includes rail and land transport business as well as auto logistics, and International Services.
"Increased volume in most of our business lines is driving revenue higher," said APL Logistics President Jim McAdam. "We are encouraged by the increasing contribution of emerging markets, particularly in China, to our first-half performance."
NOL warns that deteriorating conditions in the global economy are resulting in weakened trade demand and continued pressure on freight rates. Unless these conditions improve, it says, NOL will post a full year loss.
August 12, 2011