NOLÆs 1st quarter profits soar
Singapore-based container shipping, terminals and logistics group Neptune Orient Lines pointed to a “strong focus on cost management” as the driver behind a 183 percent jump in first quarter net income of $121 million, compared to $43 million a year earlier.
Group-wide earnings before interest, and tax (EBIT) rose 114 percent to $137 million, while revenue gained 27 percent to $2.4 billion.
“Our increased revenue clearly shows our group is well positioned in a growth industry. At a time of economic uncertainty and unprecedented fuel costs, we have again illustrated the viability of our business model and our strong focus on cost management,” said NOL Group President and Chief Executive Officer Thomas Held.
Quarterly EBIT at NOL’s container shipping unit APL increased a massive 286 percent to $108 million on the back of a 14 percent improvement in shipments to 692,900 40-foot equivalent units (FEUs). APL’s revenue for the period rose 33 percent to $2 billion.
APL’s largest regional growth was seen in the transatlantic trade, which increased 32 percent to 41,000 FEUs, followed by Latin America traffic rising 21 percent to 52,000 FEUs.
NOL said transpacific volume gained 16 percent to 232,000 FEUs in the first quarter. 'This growth was due to increased backhaul volumes and to U.S. East Coast cargoes rising as a proportion of total transpacific liftings.” NOL added that the first quarter experienced an 8 percent industry-wide contraction of U.S. West Coast volumes, although APL’s capacity in the period fell below the trend at 2 percent.
In the remaining trades, APL’s container volume for Asia/Middle East increased 12 percent to 200,000 FEUs, while the Asia/Europe trade gained the least of all regions with growth of 5 percent to 118,000 FEUs.
APL’s head-haul utilization for all trades in the quarter reached an average level of 95 percent. Average revenue per FEU increased 16 percent to $2,934 per FEU. On a regional basis this broke down as:
' Americas (transpacific and Latin America), $3,486 per FEU, up 7
' Europe (Asia/Europe and transatlantic), $3,216 per FEU, up 25 percent.
' Asia/Middle East, $2,014 per FEU, up 24 percent.
NOL’s terminals business was negatively affected by the slower transpacific trade growth and capacity withdrawals as first quarter EBIT dropped 43 percent to $12 million and revenue declined 6 percent to $145 million. Total volume throughput reduced 11 percent year-on-year to 569,000 FEUs. However, the decrease in volume was partially offset by improved trade mix and 6 percent higher average revenue per lift of $256 per FEU.
“Some softening of demand in the transpacific West Coast trade coupled with network optimization initiatives resulted in lower volumes at our U.S. West Coast terminals. This impacted the contribution of our terminals activities,” Held said. “In the mid to longer term, we expect West Coast volumes to recover. We continue to be focused on increasing utilization and improving the productivity of all aspects of our terminals. The long-term demand outlook for the sector remains very positive.”
The group’s logistics activities saw an increase in EBIT of 42 percent to $17 million with revenue up 12 percent to $363
“We continue to make good progress in logistics by focusing on our service strengths. In the first quarter, we improved ocean forwarding and land transport volumes. Additionally, cost management efforts in contract logistics pushed our yields up,” Held said.
Looking forwards, NOL said it expects the business environment to remain challenging with cost pressures impacted by escalating fuel prices. “Whilst there remains uncertainty on the economic outlook, support within the Asia region continues. The group will continue to focus on optimizing asset utilization, yield and cost management.” ' Simon Heaney