Singapore-based Neptune Orient Lines (NOL) posted a net loss of US$54 million in the second quarter of 2014 amid “persistent, difficult trading conditions,” but said it continued to “make gains at the operating level.”
For the period, NOL brought its core EBIT (earnings before interest, taxes, and nonrecurring items) loss down to $15 million, a year-on-year improvement of 52 percent. Its core EBITDA also improved, doubling to US$78 million compared to US$39 million in the same period last year.
NOL attributed the better results to its continuing focus on cost management and operational efficiency, which returned $115 million worth of cost savings in the second quarter of 2014.
Along with $80 million recorded in the first quarter, this brings its total savings so far this year to nearly $200 million, adding to the almost $1 billion accrued in the preceding two years.
“The group put in an improved performance despite the persistent, difficult trading conditions. We have more to do, but both business units have continued to make gains in improving our costs and efficiencies,” said NOL group president and CEO Ng Yat Chung.
APL, NOL’s container shipping business, made a 29 percent improvement in its EBIT for the second quarter over the same period last year, recording a loss of $29 million. Core EBITDA stood at US$61 million this quarter, climbing 135 percent from a year ago.
Cost of sales per forty-foot-equivalent unit (FEU) went up by 3 percent year-on-year in the second quarter of the year due largely to a nationwide trucking shortage in the U.S., port congestion issues in Southern California, as well as empty equipment repositioning costs. APL reported second quarter 2014 revenue of almost $1.7 billion, a 2 percent year-on-year drop as volume declined 6 percent.
“The improvement in our second quarter operating results is significant given that we saw reduced revenue and higher operating costs. We were able to achieve this through our continued focus on lowering fixed costs,” said APL president Kenneth Glenn. “We have now taken delivery of all our newbuildings and are returning more of our less efficient and expensive chartered tonnage.”
NOL’s supply chain management business, APL Logistics, lifted its core EBIT 40 percent year-on-year to $14 million in the second quarter of this year. Over the same period, it brought up its core EBITDA by 31 percent to US$17 million. Its revenue stood at $379 million, growing 7 percent year-on-year.
“At the year-on-year level, APL Logistics made improvements in key performance matrices in the second quarter of this year. We also experienced business growth across all regions,” said APL Logistics president Beat Simon. “Our strategy to seek growth opportunities in selected industry verticals and attractive markets is on track. We will make further investments in sales and operational capabilities to enhance the delivery of quality service to our customers.”
