APL loses $739 million in 2009

APL loses $739 million in 2009    NOL, the parent company of container line APL, said Thursday its liner business recorded a $739 million operating loss in 2009, a huge reversal on the $34 million the line made in 2008.
   Volume for APL fell 7 percent for the year to 4.6 million TEUs, while revenue fell 31 percent to $5.5 billion.
   'The 2009 results were disappointing and show the impact of sharp falls in demand and freight rates, especially in the first half of the year,' said Ron Widdows, NOL Group president and chief executive. 'This is evident from the dramatic reduction in annual revenue. Through the later part of 2009, improved volumes and active capacity management led to higher utilization rates, but earnings remained depressed due to low freight rates which continued below levels which enable full cost recovery.'
   Widdows said there were some positive developments during the year. In particular, fourth quarter volume rose 28 percent to 1.4 million TEUs, though revenue per TEU during that quarter fell 28 percent — a worse mark than 2009 as a whole.
   'Towards the end of the year, NOL achieved a stronger market position in a number of key liner shipping trades with better volumes and freight rates,' he said. 'The group has continued paying attention to the fundamentals — providing excellent reliability and customer service, reducing costs, increasing efficiency and maintaining the strength of the balance sheet. The NOL Group is positioned to take advantage of an improving market environment.'
   Singapore-based NOL as a whole had an operating loss of $659 million for the year, compared to a $160 million profit in 2008. Revenue fell 30 percent to $6.5 billion. Net losses for the company were $741 million, compared to an $83 million profit in 2008.
   A bright spot was NOL's terminals and logistics divisions, which Widdows said 'contributed positively to the group's performance,' though both saw profits decline during the year.
   Revenue from the terminals business fell 13 percent to $503 million, while operating profit fell from $72 million to $32 million. The logistics business saw revenue decline 26 percent to $976 million, while operating profit fell 16 percent to $54 million due to lower volume and rates.
   Average revenue per TEU in 2009 decreased 25 percent from 2008, 'due to lower core freight rates and lower bunker fuel cost recovery as well as changes in trade mix.' Vessel utilization was 89 percent for the year.
   'NOL indicated continuing losses in the first half of 2010,' the company said in its forecast for this year. 'In early 2010, there have been improvements in volumes and asset utilization in NOL's principal markets. In addition, freight rates have stabilized and trended upwards in some trades. If these conditions continue, better business performance is possible. However, significant risks remain — particularly the sustainability of demand and higher fuel costs. The group will continue to pursue strategies which reflect the current operating environment, including the achievement of cost savings and improved asset utilization, yields and productivity.' ' Eric Johnson