NOL doubles net profit in first nine months

NOL doubles net profit in first nine months    Neptune Orient Lines doubled its net income for the first nine months of the year to $588 million from $295 million, as its container shipping arm APL earned record profits from higher rates and full ships.
   The latest results confirm that the Singapore-based shipping and logistics group will this year exceed by a wide margin the annual earnings it made in each of the past five years. In 2003, NOL had net earnings of $429 million.
   In the first nine months, APL’s liner business increased its earnings before interest, tax and exceptional items (EBIT) 168 percent to $609 million, representing 17 percent of revenue — a very high ratio by industry standards. Revenue from liner rose 25 percent to $3.68 billion.
   Over the same nine-month period, APL Logistics raised its EBIT profit to $19 million from $3 million in the same period of 2003. Its revenue rose 19 percent to $822 million.
   NOL’s group EBIT for the first nine months, derived largely from container shipping, was $631 million, up 121 percent.
   “Liner profits continued to benefit from effective asset utilization and tight cost control combined with higher average revenues and higher trade volume,” said Ron Widdows, chief executive officer of APL.
   In the third quarter, which includes the start of the peak shipping season, EBIT profit from liner jumped 74 percent to $244 million, as revenue climbed 21 percent to $1.28 billion.
   APL Logistics increased its EBIT to $11 million from $2 million in the third quarter. The NOL group's EBIT rose 88 percent to $254 million.
   NOL said APL’s liner volumes rose 16 percent year-on-year in the third quarter, while average revenues per forty-foot equivalent unit increased 6 percent.
   Gains from exceptional items fell from $99 million in the third quarter of 2003 to $8 million in the latest quarter. Last year’s gains were predominantly from the sale of American Eagle Tankers.
   Excluding these exceptional items, third-quarter net profits grew 111 percent over the corresponding period last year.
   “Volume growth remained robust on the liner business while logistics has recorded strong revenue growth especially in international services,” said David Lim, president and CEO of NOL.
   He said the increase in operating profits was obtained despite rising cost pressures.
   Charter rates for containerships continued to rise in the third quarter, leading to $5.3 million in additional charter costs for the quarter. NOL noted that congestion in most of the major global ports, together with infrastructure pressures at inland transportation systems, continues to put upward pressure on operating costs. Fuel costs rose $21 million in the third quarter.
   In the third quarter, APL also made $35 million of additional cost savings. For the year to date, overall liner costs per unit fell 2 percent compared with the corresponding period last year.
   Hans Hickler, CEO of APL Logistics, said logistics revenue growth continues to benefit from global outsourcing trends. APL Logistics’ revenue from international logistics services grew 34 percent in the third quarter.
   NOL’s strong cash flow has resulted in a reduction of its debts. “The group will continue to study closely what the appropriate level of cash and debt should be from a long term perspective, and providing for an ability to respond flexibly to market opportunities,” NOL said.