APL’s 1st quarter earnings down 67%

APL’s 1st quarter earnings down 67% Singapore-based Neptune Orient Lines (NOL) said today its container-shipping unit APL’s first quarter core earnings before interest, tax and non-recurring items (Core EBIT) dropped 67 percent to $41 million, down from $123 million in the same period last year.
   APL’s revenue for the quarter was up 2 percent to $1.57 billion, from $1.54 billion.
   NOL posted a quarterly group net income of $43 million, down 64 percent from $120 million a year ago. Group revenue increased 1 percent to $1.9 billion.
   “Freight rate levels for our company in the first quarter of 2007 were, on average, 6 percent lower than in first quarter 2006,” said Thomas Held, NOL Group president and chief executive officer. “This reduction in rate levels year-on-year has been the major factor in the lower profit reported today. The effect of recent freight rate increases achieved in some key trade lanes have yet to be fully reflected in these results.”
   “Demand for our premium liner services strengthened in the first quarter ' reflecting continuing strong demand across all trade lanes,” Held said.
   APL’s quarterly global volume rose 10 percent to 582,000 FEUs with volume in the Asia/Middle East region up 25 percent to 196,000 FEUs. Volume in the Americas (transpacific and Latin America) region increased 5 percent to 243,000 FEUs while Europe (Asia/Europe and transatlantic) improved 1 percent to 143,000 FEUs.
   As previously mentioned, APL’s average revenue per FEU for the period was down 6 percent to $2,538. On a regional basis, Americas revenue per FEU also dropped 6 percent to $3,261 while Europe improved 5 percent to $2,566 per FEU and Asia/Middle East declined 8 percent to $1,618 per FEU.
   Looking forward, NOL said that because most of the rate pressure in the industry occurred during the last three quarters of 2006 the positive effect of recent rates increases in Asia/Europe and some other key trade lanes will be seen from the second half of the year.
   “Freight rate increases have been achieved recently in some key trade lanes due to a better than expected supply and demand gap,” NOL said.
   APL Logistics’ Core EBIT declined 25 percent to $12 million in the first quarter with revenue down 6 percent to $325 million.
   “The overall results of our logistics business are disappointing in that they show a decline in year-on-year earnings, but reflect the ongoing process of realignment of the business outlined last year,” Held said.