APL predicts losses through mid-2010

APL predicts losses through mid-2010    Neptune Orient Lines, parent company of container carrier APL, Thursday reported a third quarter net loss of $139 million compared with a $35 million net profit for the same period of 2008, and said it expects to continue to see red ink until the middle of next year.
   “Despite the cost saving measures that have been implemented and recent improvements in volumes and freight rates in certain trade lanes, NOL anticipates a continuation of adverse business operating conditions,” the company said. “In view of the severity of the downturn in container shipping, the company expects to incur significant losses in the fourth quarter of 2009 and at least through the first half of next year.”
   Third quarter revenue was $1.56 billion, 34 percent less than in the same 2008 period. The company noted it has lost $530 million year to date.
   “As anticipated, the third quarter saw a continuation of adverse business operating conditions,” said NOL Group President and Chief Executive Officer Ronald D. Widdows. “Despite some improvements in certain trades, container shipping freight rates remain at uneconomic levels. In this environment, NOL Group is continuing to focus on cost management, productivity improvement and service delivery.

Widdows

   Widdows said a $1 billion share rights issue during the quarter has left the company “well positioned to weather the ongoing downturn in container shipping. The company’s balance sheet is strong with ' access to various committed credit facilities.”
   The company said APL's container-shipping revenue was $1.31 billion for the quarter, 36 percent less than in the same 2008 period.
   According to the information service AXS Alphaliner, APL is the world’s fifth-largest container carrier in the world with a fleet of 136 owned and chartered ships and 539,811 TEUs of capacity and 20 ships with 143,315 TEUs of capacity on order.
   APL President Eng Aik Meng said, “Volumes have been slowly improving since the early part of this year, with greater stability in global trade and the onset of the peak season. Nevertheless, our container shipping earnings continue to be depressed, showing the effect of reduced rates.”
   APL moved 586,000 40-foot equivalent units in the quarter, 6 percent fewer than in the same 2008 period. The company said this was due to declines in volumes in Europe and Americas trade, partially offset by growth in Asia/Middle East trade.
   The company noted that over the last four weeks of the quarter, volumes were 1 percent higher compared to the corresponding period last year.
   It said average third quarter 2009 overall head-haul utilization level was 93 percent, compared to 90 percent in the same 2008 period, and that average revenue per FEU in the quarter was 29 percent lower year-on-year, mainly due to freight rate deterioration across all major trade lanes combined with lower bunker recovery.
   Eng noted that APL’s average revenue per container was “impacted by new contract pricing in the transpacific trade which took effect in May and June of this year, marked by lower freight rates and bunker recovery.”
   APL Logistics had revenue of $234 million in the quarter, 26 percent less than in the same 2008 period, but the company said the unit had core operating earnings of $17 million, $1 million less than in the same 2008 period.
   The company's terminal business had operating earnings of $8 million in the quarter, 65 percent less than in the same period in 2008 and the company said this reflected lower volumes at its U.S. West Coast terminals.