APL nets nearly $500 million in 2010
Liner carrier APL reported $490 million in operating profits in 2010, a year after it lost $698 million, APL's parent company NOL said Wednesday.
APL's revenue rose 47 percent in 2010 to $8.3 billion, aided by 'higher volumes of cargo transported and improved freight rates in most major trade lanes.
Volume increased 24 percent from 2009 and average revenue per 40-foot container rose 22 percent to $2,787. APL's average utilization rate for its vessels in 2010 was 94 percent.
“Improved conditions for containerized trade led to higher rates and increased volume,” said APL President Eng Aik Meng. “We were able to magnify those results by keeping vessel utilization high, containing costs and achieving greater operational efficiency.”
The NOL Group reported net profit of $461 million for 2010, representing a $1.2 billion turnaround from its $741 million loss in 2009. Group revenue reached an all-time high of $9.4 billion, up 45 percent from last year.
“Strong demand from shippers and rate increases in our major trade lanes helped drive the turnaround,” said Ronald D. Widdows, NOL Group chief executive officer. “Continued emphasis on the fundamentals of our business — efficiency, cost discipline and service quality — is just as important going forward.”
APL Logistics' operating profits increased 24 percent to $67 million, on revenue that increased 29 percent to $1.3 billion.
'The increase resulted from higher volume across APL Logistics business segments, most notably rail and land transport and auto logistics,' the company said. 'International services revenue was up 42 percent in 2010 due to increased shipment volume and improved sea and air freight rates.'
Meanwhile, the investment bank DnB NOR said in an analyst report on NOL that it expected its profit margin in 2011 to be hit by higher costs.
'We have increased (estimated) revenue growth in 2011 (+19 percent from previous) and 2012 (+23 percent) due to expectations of higher volumes growth as a result of NOL progressively taking delivery of larger post-Panamax vessels and increased shipment demand amidst recovery in developed economies in the U.S. and Europe,' the report said. 'Rates should also see an uplift, although somewhat mitigated by pressures from cost inflation. Hence, we have reduced our EBIT margin by approximately 2 percent for 2011.'
The report said NOL should profit from a recovering U.S. economy, since it's exposure to the transpacific trade is somewhat heavier than some of its competitors.
'By focusing on container shipping and logistics as a supporting business, NOL is positioned to be influenced by the cyclical nature of global trade, particularly for finished goods,' the report said. 'Some of NOL's competitors in container shipping, such as the Japanese and Korean shipping companies, are more diversified in terms of vessel types.
'The company's trade route indicates a relatively balanced exposure by volume, but heavily geared towards the Americas when viewed on a revenue basis. This positions the company more as a 'transpacific' play, in our view.'
APL is the seventh-largest carrier by fleet size with 580,399 TEUs of capacity, according to maritime news service Alphaliner, though it’s tightly grouped with four other lines — Evergreen, Hapag-Lloyd, CSAV and COSCO — with fleets of 545,000 to 607,000 TEUs. Moreover, APL has more capacity on order than all but five lines. ' Eric Johnson