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Nenaco sails into black

NEGROS Navigation Company sees a turnaround in business this year, as it expects higher net income in the second quarter, enough to put the business back in the black for the entire 2006. The company eyes a P108 million net income during the second quarter, a reversal from the net loss of P29.2 million during the previous quarter. For the third quarter, however, a P57 million net loss is expected. Projections look better for the fourth quarter with a P26 million net income. For the entire 2006, a net of P47 million is projected, including debt payments, compared to the previous year’s net loss of P134 million. "As in the past, the company will make its biggest run in the second quarter, which is normally the travel season," it said. "The third quarter, which is largely the rainy season, will be much like the first quarter." This year could be the first time for Nenaco since a Manila court approved its corporate rehabilitation in the fourth quarter of 2004. The company, however, said it does not expect passenger and cargo traffic to pick up this year as a result of various factors, including the sluggish growth of the local economy and continued increases in oil prices. "The passage business will be at best flat whilst the cargo business will maintain its steady growth," said Nenaco, a unit of publicly-listed Metro Pacific Corp. It added that stiff competition from the roll on-roll off service, and the deteriorating number of passengers, as well as the aggressive marketing of some airline firms to bring down their cost have prevented the company from raking in more income from operations. During the first quarter, revenue from passage plummeted 13% but strong cargo volume offset the decline. Including ramp usage fee, the total favorable variance for freight is about P27 million, just enough to cushion the mediocre performance of the passage business. For the period, Nenaco was able to trim losses after it used only six vessels from nine last year. Net revenue was also lower than last year, but operating costs plummeted on a much higher scale, it said. Meanwhile, Metro Pacific intends to replace two of Nenaco’s passenger ships with freight and cargo vessels in a refleeting plan that the company will undertake.

Ships are also to be redesigned so they will consume less fuel.


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