P&O NEDLLOYD’S 1ST-QUARTER RESULT DIVES AS RATES FALL

P&O NEDLLOYD’S 1ST-QUARTER RESULT DIVES AS RATES FALL    Pre-tax first-quarter results at P&O Nedlloyd showed a marked deterioration, with an $84 million deficit, as the Anglo-Dutch mega-carrier was hit by a 17-percent decrease in average revenue per TEU.
   The $84 million loss for the latest quarter compares with a pre-tax profit of $18 million in the first quarter of 2001. P&O Nedlloyd earned a pre-tax profit of $35 million for the year 2001 as a whole.
   The carrier posted an operating deficit of $68 million in the first quarter of this year, as compared to an operating profit of $31 million in the same quarter of last year.
   P&O Nedlloyd increased its traffic volume 9 percent to 791,700 TEUs in the latest quarter. Average revenue was down 17 percent to $1,148 per TEU, from $1,389 a year ago.
   Total revenues for the first quarter decreased 10 percent to $909 million.
   P&O Nedlloyd described the lower revenue per TEU as the single-biggest factor for the decrease in its profits, but said it has also reduced unit costs compared to last year. A new $350 million savings program, under way, will have a further impact later this year and in 2003, the company said.
   P&O Nedlloyd said the first quarter is traditionally the weakest quarter of the year.
   Robert Woods, group managing director of P&O Nedlloyd, said the company has seen stronger cargo flows than expected. The stronger cargo volumes have allowed carriers to introduce several successful “rate recovery programs,” he said.
   “There are early signs that the reduction in revenue rates has bottomed out, but pressure from industry overcapacity will remain,” a spokesman for P&O Nedlloyd said.
   P&O Nedlloyd and other carriers of the Grand Alliance will continue to lay up ships.
   “Overall volumes for the first quarter were up by 9 percent compared to the first quarter of 2001 and load factors, assisted by ship lay-ups, were much improved,” the company said.
   The carrier is implementing a cost-cutting program announced three months ago to reduce its global staff by 1,000 employees. P&O Nedlloyd’s offices around the world have started to lay off staff and transfer some positions to low-cost offices in India and China. The carrier is also negotiating with unions and work councils in continental Europe to cut jobs there. Back-office and documentation activities are being relocated from the United States and Europe to low-cost offices in Asia, where the carrier aims to centralize operations and increase productivity.
   Commenting on the May 1 service contract negotiations in the transpacific trade, Woods said the results concerning new contract freight rates were mixed. “Some contracts had higher rates; some had lower rates,” he said. Woods said the downward trend of transpacific freight rates “is beginning to stop.”