Home » Breaking News, Maritime » NOL loses $254 million in first quarter

Neptune Orient Lines (NOL), the Singapore-based container shipping and logistics company, reported a bigger first quarter 2012 net loss amounting to US$254 million from a net loss of $10 million in the same period last year.

NOL traced the worse performance early this year to high fuel costs and low freight rates in container shipping.

APL, NOL’s liner shipping business, reported a 4 percent decrease in first quarter 2012 revenue to $2 billion compared to a year ago. Revenue per FEU (40-foot equivalent unit) declined 7 percent due mostly to lower rates, the company said in a press statement.

Bunker fuel price increased from $523 per metric ton in 1Q 2011 to $684 metric ton in 1Q 2012. APL said it reduced fuel consumption by 75,000 metric tons even though overall cargo volume increased 4 percent in the first quarter.

“There were positive signs in the first quarter—the freight rate increases in March and growth in the logistics business,” said Ng Yat Chung, NOL CEO. “But we must continue to aggressively manage our operating costs, and streamline our organization for greater efficiency.”

The company said the global economic outlook “remains uncertain” and the container shipping industry continues to face high fuel costs and overcapacity. “If conditions for rates and fuel costs do not improve, the Group’s financial performance will remain weak,” it predicted.

The company said it achieved about $100 million in cost savings in the first quarter of 2012 under its ongoing program of reduced fuel consumption and improved operational costs. It said it is on track to achieve $500 million in savings for 2012.

NOL is also undertaking an organizational restructuring to see additional annual savings of about $70 million from 2013 onwards.

Meanwhile, APL Logistics, NOL’s supply chain management business, reported first quarter 2012 revenue of $394 million, up 7 percent year-over-year. Core EBIT (earnings before interest and taxes) was $13 million, a decline of 38 percent from the first quarter of 2011 “due to higher operating and technology costs related to growth initiatives,” it said.

 

Photo: NOL

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