NOL suffers US$245 million loss

Singapore - Neptune Orient Lines (NOL) booked a US$245 million net loss for the first quarter of 2009 due to the global downturn and falling freight rates.

In the first quarter of this year, the company was hit by a significant decline in global trade and shipping volumes, in addition to falling freight rates across all major trade lanes, NOL said.

Ronald Widdows, group president and CEO of NOL said, "During the first quarter, a range of significant business adjustments were undertaken to better align the group's overall network and cost structures with reduced market demand. Further cost saving initiatives have been set in motion and will be implemented as the year progresses."

The US$245 million loss in Q109 is in contrast to the group's net profit of US$121 million reported for the same period last year. NOL also reported a loss at Core EBIT level of US$222 million for 1Q09, while revenue for the quarter declined by 36% year-on-year to US$1.54 billion.

NOL's container shipping arm APL, transported 481,000 FEUs (forty-foot equivalent units) in 1Q09, a decline of 27% year-on-year, as volumes declined in all trade lanes. The average container volumes over a ten-week period from 27 December 2008 to March 2009 was 32,600 FEUs per week, while an average of 38,888 FEUs per week was recorded during the four weeks from March 7 to April 3, 2009.

Average revenue for container shipping per FEU decreased 16% year-on-year due largely to a combination of lower bunker recovery and freight rate pressures, particularly in the Asia-Europe and intra-Asia trade lanes, the company said.

On the other hand, NOL's logistics and terminals business units made positive Core EBIT contributions in Q109.

APL Logistics reported a 34% revenue fall in 1Q09, to US$241 million, and Core EBIT of US$14 million, 18% lower than the same period in 2008.  

NOL's terminals business reported first quarter revenue declines of 23% from 1Q08 at US$112 million. Core EBIT was US$4 million, compared with US$12 million in the same period last year.

Widdows said: "logistics recorded a substantial reduction in volumes and revenues for the quarter, reflecting global economic uncertainty and declining trade activity...our terminals activities were negatively impacted by the industry-wide decline in global container trade."

However, the group's financial strength remains buoyant.  

"NOL's balance sheet remains strong with net gearing of 0.45 times as at 3 April 2009," Widdows said.

For the remaining three quarters of this year, NOL predicts that business conditions will continue to be adverse and expects to post a significant full year loss.