Lower rates see APL’s profit slump 66% in 3rd quarter

Lower rates see APL’s profit slump 66% in 3rd quarter    Singapore-based Neptune Orient Lines (NOL) said today that lower freight rates and higher fuel prices saw APL's third quarter core earnings before interest, tax and non-recurring items (core EBIT) drop 66 percent to $82 million, from $243 million in the same quarter last year.
   APL's third quarter revenue was down 1 percent to $1.45 billion. That coupled with a 9 percent rise in container volumes to 505,000 FEUs, saw its average revenue per FEU slide 10 percent to $2,652.
   The container line saw a 28 percent rise in Latin America volume and a 21 percent gain in Asia/Middle East cargoes. Its Asia/Europe volume rose 7 percent. Volume in the transpacific market was flat but the transatlantic trade slipped 3 percent.
   APL’s head-haul utilization improved to 99 percent compared to 98 percent a year earlier. Vessel capacity increased 7 percent. Bunker and land transport fuel cost increases led to 3 percent higher costs per FEU for the quarter.
   'Operationally, APL has performed exceptionally well during the third quarter of 2006,' said Ron Widdows, APL's chief executive officer. 'Marketplace demand for our services has been very strong, with our liftings 9 percent higher than in the third quarter last year. A consistently high level of demand strength has been experienced throughout the period.'
   For the year to date, APL's core EBIT was $276 million, down 57 percent from the same period last year, with revenue flat at $4.32 billion. APL's container volumes after nine months were up 7 percent to 1.52 million FEUs.
   Looking ahead, NOL said it expects APL's operating conditions 'to remain challenging,' and that its prospects 'depend on the demand-supply relationship and pricing behavior in the industry.'
   APL Logistics' core EBIT declined 6 percent to $16 million in the third quarter with revenue up 3 percent to $313 million. For the first nine months of 2006, APL Logistics' core EBIT was down 7 percent to $42 million with revenue improving 4 percent to $949 million.
   'Business conditions have continued to be challenging, and margins were reduced because of higher costs associated with investments in information technology and to enhance the capability of the sales organization,' NOL said of its logistics unit.
   'Improvements were achieved in the level of sales in contract logistics, and also in international services, which benefited from seasonal factors. Revenues have grown strongly within the Asia/Middle East region, and in the auto/industrial and consumer goods segments in particular.'
   NOL posted a consolidated net income in the third quarter of $127 million, down 49 percent from $249 million a year ago. Group revenue for the period was flat at $1.76 billion. After nine months, NOL’s net income was down 51 percent at $314 million with revenue again flat at $5.28 billion. The group results included a positive adjustment of $144 million as a consequence of entering its U.S.-flagged vessels into the recently enacted U.S. tonnage tax regime.
   'NOL’s third-quarter results reflect significantly more challenging market conditions than existed a year ago,' said Thomas Held, NOL's new group president and CEO, who replaced David Lim Wednesday.