• ITVI.USA
    15,462.460
    -34.260
    -0.2%
  • OTLT.USA
    2.752
    0.009
    0.3%
  • OTRI.USA
    20.670
    -0.440
    -2.1%
  • OTVI.USA
    15,437.200
    -29.190
    -0.2%
  • TSTOPVRPM.ATLPHL
    3.300
    0.000
    0%
  • TSTOPVRPM.CHIATL
    3.140
    0.190
    6.4%
  • TSTOPVRPM.DALLAX
    1.590
    0.150
    10.4%
  • TSTOPVRPM.LAXDAL
    3.330
    0.020
    0.6%
  • TSTOPVRPM.PHLCHI
    2.170
    0.020
    0.9%
  • TSTOPVRPM.LAXSEA
    4.080
    0.130
    3.3%
  • WAIT.USA
    125.000
    -1.000
    -0.8%
  • ITVI.USA
    15,462.460
    -34.260
    -0.2%
  • OTLT.USA
    2.752
    0.009
    0.3%
  • OTRI.USA
    20.670
    -0.440
    -2.1%
  • OTVI.USA
    15,437.200
    -29.190
    -0.2%
  • TSTOPVRPM.ATLPHL
    3.300
    0.000
    0%
  • TSTOPVRPM.CHIATL
    3.140
    0.190
    6.4%
  • TSTOPVRPM.DALLAX
    1.590
    0.150
    10.4%
  • TSTOPVRPM.LAXDAL
    3.330
    0.020
    0.6%
  • TSTOPVRPM.PHLCHI
    2.170
    0.020
    0.9%
  • TSTOPVRPM.LAXSEA
    4.080
    0.130
    3.3%
  • WAIT.USA
    125.000
    -1.000
    -0.8%
American Shipper

LINER DOWNTURN, LOGISTICS DRAIN NOL’S HALF-YEAR PROFITS

LINER DOWNTURN, LOGISTICS DRAIN NOL’S HALF-YEAR PROFITS

   Singapore-based Neptune Orient Lines, the shipping and logistics group that owns APL Liner and APL Logistics, has reported a 78-percent dive in group net profit for the first half of the year, to $11 million, and warned that it may post a loss for the year as whole because of the “unfavorable operating environment.”

   Overall profit fell to $11 million in the latest six-month period, from $49 million a year ago, as group revenue increased by 2 percent, to $2.3 billion.

   Group operating profit (earnings before interest and tax) was down by 36 percent, to $78 million, from $122 million in the first half of 2000.

   Neptune Orient Lines said that APL Liner had a 68-percent drop in earnings before interest and tax, to $31 million, APL Logistics posted an operating loss of $9 million, compared to earnings of $10 million a year ago. By contrast, the group’s tanker and bulk shipping arm increased earnings before interest and tax from $13 million to $48 million.

   NOL is one of the first shipping groups to report a sharp fall in results from its container shipping activities, since the liner market starting worsening at the beginning of the year. Last year was marked by strong cargo volumes and record profits among shipping lines.

   NOL blamed the sharp drop in its half-year profits on supply and demand pressures and freight rate falls in container shipping and on the cost of integrating newly-acquired businesses at APL Logistics.

   “We would have preferred a little more time to consolidate all we have achieved and are achieving before having to deal with a severe downturn in the economic environment like this one,” said Flemming R. Jacobs, group president and chief executive officer of NOL.

   Citing the economic slowdown, NOL said 2001 “is proving a tough year.”

   “The group recorded serious losses in 1997-98 when the Asian crisis hit just as it had purchased the American liner business, APL,” NOL said. “Overall profit was also impacted by the U.S.$1.7 billion in debt, which the company still carries,” it added, describing its high interest costs as “a drain.”

   NOL said that APL Logistics increased its contribution to group revenues from 9 percent to 14 percent in the first half of 2001. The liner business now makes up 76 percent of group revenues, down from 83 percent in the first half of last year.

   Jacobs said that NOL will continue its strategy, including by becoming more efficient.

   NOL’s liner business suffered a “significant reduction in both rates and volumes in trades touching the Americas,” with rates down 4 percent and volumes down 5 percent. Rates were up in Europe and in the Asia/Mideast region.

      APL Liner’s revenues dropped by 2 percent, to $1.77 billion, and earnings before interest and tax was more than halved in the first half.

   “The weakening supply/demand picture affected freight rates in all east/west trades and we gradually had to adjust freight rates,” Jacobs said.

   APL Liner is dealing with low growth by returning certain chartered-in vessels to their owners as new vessels that are more cost efficient come on line, Jacobs said. “Trade growth will continue, albeit more slowly,” he added.

   Jacobs told a news conference in Singapore today that prospects for container shipping are expected to deteriorate in the second half of the year. The company mentioned higher vessel capacity and further rate decline as factors.

   “Rates have declined in several main trades since late last year and although they are stabilizing, we will have the full impact over the rest of this year and probably into at least part of 2002,” Jacobs commented.

   “With the continued uncertainty about global economic developments, we expect the full-year result for liner to be substantially less than for 2000,” he said.

   APL Logistics reported half-year net revenues of $330 million, up 63 percent, as a result of increased business activities and the acquisition of GATX Logistics earlier this year. However, earnings moved into the red “due to acquisition and one-time development costs.”

   APL Logistics said that the former e-Logistics arm of GATX, which served dotcoms, cost its new owner money when the dot-com bubble burst. Now renamed APL Direct Logistics, this business is now working on e-fulfillment, delivering goods ordered over the Internet to the customer’s door, in partnership with e-tailers.

   Commenting on the outlook of the group as a whole, Jacobs said: “With the current operating environment, we expect overall results for the full year 2001 to be significantly lower than last year’s record results. Key reasons are more difficult operating conditions for the liner business and the expansion of the logistics business.”

We are glad you’re enjoying the content

Sign up for a free FreightWaves account today for unlimited access to all of our latest content

By signing in for the first time, I give consent for FreightWaves to send me event updates and news. I can unsubscribe from these emails at any time. For more information please see our Privacy Policy.