Neptune Orient Lines (NOL) posted a first-quarter net loss from a profit last year that was gained from a one-off sale of its corporate headquarters.
NOL swung to a loss of US$98 million compared to a $76 million profit in the same period last year which included a $200-million gain from selling its headquarter building in Singapore.
“Operating conditions in the first quarter had been difficult, with severe weather disruptions in Europe and North America. This compounded the challenges posed by continued excess capacity in the container shipping business,” said NOL president and CEO Ng Yat Chung.
The group reported a 14 percent improvement in its first quarter 2014 EBIT (earnings before interest, taxes and non-recurring items), narrowing its loss to $65 million from a year ago.
EBITDA (earnings before interest, taxes, depreciation, and amortization) rose to $33 million this quarter, compared to $5 million in the same period last year. NOL attributed the improvement to cost savings and improved efficiency, which delivered $80 million worth of cost savings in the first three months of 2014.
APL, its container shipping business, lifted its first-quarter EBIT by 10 percent over the same period last year, recording a loss of $83 million. Cost savings and efficiency gains helped reduce cost of sales per forty-foot-equivalent unit by 6 percent. First-quarter 2014 revenue was $1.9 billion, while year-on-year volume grew 2 percent, and average freight rates dipped 6 percent.
“APL’s emphasis on capacity management, as well as savings in areas such as bunker consumption and vessel and voyage operations, helped cushion the impact of falling freight rates in this year’s first quarter,” said APL president Kenneth Glenn. “As more of our newbuildings come on stream in the following months, along with the scheduled return of less efficient chartered tonnage, we are on track to continue lowering slot costs and further strengthen our competitiveness.”
NOL’s supply chain management unit, APL Logistics, made a year-on-year EBIT improvement of 13 percent in the first quarter of this year. Its revenue of $423 million was relatively unchanged from that of the same quarter last year.
“Both our business units delivered better year-on-year operating results this quarter,” said Ng. “Going forward, global economic prospects and trading conditions remain uncertain. Oversupply of shipping capacity will continue to exert pressure on liner freight rates. The group aims to improve its financial performance in 2014 through its continued focus on cost discipline and drive for operational efficiency. We will also seek growth opportunities, particularly in our logistics business.”
Meanwhile, Korea’s Hanjin Shipping reported a wider loss of KRW224.5 billion (US$218.8 million) in the first quarter from a loss of KRW34.7 billion year-over-year as its profit was affected by the sale of old vessels to improve its finances.
Revenue fell to KRW2.15 trillion in the first quarter of the year from KRW2.33 trillion for the same period last year. Freight rates fell 2 percent even as volumes rose slightly by 0.7 percent to 1.11 million standard units.
