Home » Maritime » NOL enjoys continued growth and profitability in Q3 2004

NEPTUNE ORIENT LINES (NOL) has reported net profit of $234 million for the third quarter (3Q), taking net profits for the year-to-date to US$588 million, almost double the earnings over the same period last year.

Core Earnings Before Net Interest Expense, Tax and Exceptional Items (EBIT) for 3Q rose to $254 million, representing an 88% year-on-year (YoY) growth while net profits were $234 million, a 13% increase over last year. Gains from exceptional items fell from $99 million in 3Q03 to $8 million in 3Q this year. Last year’s gains were predominantly from the sale of American Eagle Tankers while this year’s arise mainly from the cessation of goodwill amortisation following the early adoption of Financial Reporting Standard (FRS) 103, which no longer permits the amortization of goodwill. Excluding these exceptional items, 3Q net profits grew 111% over the corresponding period last year.

NOL chairman Cheng Wai Keung said, “Both the Liner and Logistics businesses have recorded consecutively higher quarterly profits as well as an improving margin trend this year.”

David Lim, Group President and CEO, said, “Volume growth remained robust on the Liner business while Logistics has recorded strong revenue growth especially in International Services. We have improved operating profits despite rising cost pressures as we continue to execute well our strategy of optimising the use of our assets and containing our costs.”

Liner NOL’s Liner business, APL, recorded Core EBIT of $244 million in the 3Q. This was a 74% increase over 3Q last year and a 29% increase over the 2Q 2004.

CEO for APL, Ron Widdows, said, “Liner profits continued to benefit from effective asset utilization and tight cost control combined with higher average revenues and higher trade volume. Volumes increased 16% YoY in the 3Q, boosted by sustained strong demand along the key trading routes and the additional capacity introduced since the beginning of 2004. Average revenues per FEU (forty-foot equivalent unit) in the 3Q improved 6% YoY, a result of actively managing cargo mix and the benefits of seasonal surcharges and rate increases”.

The Group introduced several new services in the 3Q of 2004. This includes the SCX (South China Europe Express), an Asia-Europe service that began in July. In August, it launched the VCX (Vietnam China Express), which improves service times from Vietnam to the US, and the PS5 service between Hong Kong/South China and the US West Coast (Seattle). The PS5 provides customers extra support for the peak season and fast transit times between China and Seattle, linking with intermodal transport beyond Seattle.

Congestion in most of the major ports globally, together with infrastructure pressures at inland transportation systems, continues to put upward pressure on operating costs. For the 3Q, additional cost savings of $35 million were achieved, resulting in total cost savings of $75 million for the year-to-date. The company remains on track to achieve its full-year target of $100 million. Year-to-date, overall Liner costs per unit fell 2% compared with the corresponding period last year. Logistics APL Logistics achieved further profit improvements in the 3Q. Core EBIT rose from $2 million in the 3Q last year to $11 million in the current quarter. This was also 120% better than the 2Q 2004 Core EBIT of $5 million.

3Q revenues increased 15% YoY, due largely to strong growth in International Services in Europe. CEO of APL Logistics, Hans Hickler, said, “Logistics revenue growth continues to benefit from global outsourcing trends. Our on-going focus on International Services has resulted in new contract wins and increased demand from existing customers, which has contributed to the strong revenue growth of 34% in the 3Q, as compared to the corresponding period last year. Revenues for Contract Logistics Services also continues to grow, at 8% YoY in the 3Q.”

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