P&O Nedlloyd nets $56 million in fourth quarter

P&O Nedlloyd nets $56 million in fourth quarter    P&O Nedlloyd ended 2003 with a stronger fourth quarter that produced higher freight rates and a net after-tax profit of $56 million, as compared to a loss of $83 million in the year-earlier period, bringing annual earnings slightly above breakeven.
   For the year, P&O Nedlloyd earned $15 million in net profit, as compared to a loss of $304 million in 2002.
   “During 2003 the P&O Nedlloyd team succeeded in turning a prior year operating loss of $206 million into an operating profit of $96 million — a positive swing of $302 million in our financial performance,” said Philip Green, chief executive officer of P&O Nedlloyd. “This is a significant achievement, but we need to do more.”
   Fourth quarter revenue climbed 22 percent to $1.3 billion from $1.1 billion in the same quarter of 2002. Average revenue per TEU rose 16 percent to $1,347, and volume improved 5 percent to about 988,000 TEUs.
   Operating income before interest and restructuring costs was $84 million in the latest quarter representing 6.2 percent of revenue, as compared to a loss of $49 million a year earlier.
   For the year, revenue increased 18 percent to $4.8 billion, based on an 18-percent jump in average revenue per TEU, to $1,287 from $1,145, and a 5-percent volume rise to 3.7 million TEUs.
   P&O Nedlloyd said it improved its operating profit last year despite the adverse effect of both fuel costs and currency.
   “The much improved result was largely the result of the rise in freight rates (up 16 percent on the fourth quarter of 2002 and 12 percent year on year),” the company said. The main improvements came in the east/west trades, especially Europe/Asia and the transpacific.
   “Volume growth in these trades was driven mainly by the underlying shift in sourcing of goods supplying the U.S. and European markets to China and elsewhere in Asia,” the carrier said.
   P&O Nedlloyd made annualized cost cuts of $301 million over 2002-2003, before restructuring costs of $28 million in 2002 and $19 million in 2003. These fell short of P&O Nedlloyd’s target of $350 million, mainly due to increases in ship charter rates and a growth in trade imbalances at the end of 2003, the company reported.
   P&O Nedlloyd said that with the favorable trend in freight rates, and provided trade growth continues as in 2003, the outlook for the container shipping industry “remains positive” for 2004 although cost pressures remain from currency movements, high fuel prices and rising charter rates.
   P&O Nedlloyd’s owners, the P&O group and Royal Nedlloyd, are preparing to submit a plan to stockholders under which P&O Nedlloyd will become an independent public company traded on the Amsterdam stock exchange.
   The company's return to profit after record losses in 2002 follows the recent announcement that Neptune Orient Lines, the parent company of APL Liner and APL Logistics, also completed its turnaround last year. Neptune Orient Lines recovered from losses of $330 million made in 2002 to report annual net profits of $429 million in the year ended Dec. 26, 2003. Recent annual results from major east/west carriers suggest that their 2003 results were as good as, if not better than, 2001, which marked the previous cyclical peak in container shipping.
   Royal Nedlloyd confirmed that the Scandinavian tanker-shipping millionaire John Fredricksen has bought a 6.7-percent shareholding in the company.