NOL reports red ink year

APL SouthamptonFEBRUARY 22, 2013 — Container shipping giant Neptune Orient Lines (NOL) has posted a full year net loss of US$419 million for 2012, mainly due to a first quarter net loss (before non-recurring items) of $255 million and one-time charges of $108 million.

Singapore-based NOL said that its efficiency program delivered $504 million of cost savings, which is in line with its target. The savings were primarily achieved through reduced fuel consumption, network optimization and increased terminal productivity.

"General market conditions in 2012 remained challenging. But thanks to our focus on increasing efficiencies throughout the Group, we are in a better competitive position than before," said NOL Group CEO Ng Yat Chung. "We have improved our cost base, renewed our fleet and expanded our logistics business. We are starting 2013 on a stronger footing than a year before."

NOL said 2012 revenue increased 3 percent to $9.5 billion. NOL's supply chain management business, APL Logistics, reported record revenue of $1.6 billion. Its fourth quarter Core EBIT margin was the highest recorded in nine consecutive quarters.

APL, NOL Group's liner shipping business, improved its performance in 2012 by $167 million to report a Core EBIT loss of $279 million. APL shipped 3.02 million FEUs in 2012, a one percent growth in volume, achieved with a smaller and more efficient fleet.

APL reduced its fleet capacity by 8 percent and total fuel consumed by 10 percent during the year.

A series of freight rate hikes across most trade lanes steadied average revenue per FEU (forty-foot equivalent unit) at $2,509, which remained relatively unchanged from 2011.

APL said that headhaul vessel utilization remained above 90 percent in 2012. The company said it continued to benefit from fuel, operational and other cost efficiencies.

"APL's improved competitiveness has contributed to a better 4Q performance despite it being a traditionally weak season," said APL President Kenneth Glenn. "We have continuously reduced our costs per FEU and will continue to focus on optimizing yield while delivering a high level of service to our customers."

NOL's supply chain management business, APL Logistics, reported record revenue of $1.6 billion, up 11 percent from 2011. Its fourth quarter Core EBIT stood at $26 million, up 34 percent from the same period last year. APL Logistics continued to be profitable in 2012, posting a full year Core EBIT of $67 million.

"A 15 percent year-on-year growth in our contract logistics business, bolstered by strong demand in Asia for our international services, contributed to the results," said APL Logistics President Jim McAdam. "We will continue the momentum gained through our strategic investments made in China, India and the U.S. during 2012, for further growth in 2013."


NOL says that although the global economy has shown some signs of improvement, the container shipping industry continues to face severe oversupply, causing considerable container freight rate uncertainty.

"Notwithstanding these challenges," says NOL, "the Group will start 2013 with a better cost base as a result of a modern fleet and more efficient processes. Barring unforeseen circumstances, the Group expects a better performance than in 2012."

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