P&O Nedlloyd’s first-half results boosted by higher margins, rates

P&O Nedlloyd’s first-half results boosted by higher margins, rates    Royal P&O Nedlloyd said Wednesday it boosted its group operating profit 92 percent to $213 million in the first half, from a pro forma result of $111 million a year earlier, as the Dutch group announced its last quarterly financial results as an independent public company.
   Firing a strong final salvo, the company made consolidated net profit in the past six months of $163 million, compared to $10 million profit in the first half of 2004.
   The improved results come from higher freight rates and margins at Royal P&O Nedlloyd’s container shipping arm.
   Average freight rate per TEU jumped 13 percent to $1,567 in the first half of this year, from $1,384 a year earlier. Average unit cost rose 10 percent over the same period, allowing the carrier to raise its operating profit margin from 4 percent of revenue in the first half of 2004 to 7 percent of revenue in the latest six-month period.
   Royal P&O Nedlloyd reported a first-half container shipping operating profit of $214 million, up 78 percent on the $120 million result a year earlier. Container shipping revenue soared 17 percent to $3.2 billion in the first half, although volume grew just 3 percent to 2 million TEUs due to ship capacity constraints.
   Philip Green, chief executive officer of Royal P&O Nedlloyd, noted the successful implementation of P&O Nedlloyd’s yield management program and favorable supply and demand market conditions.
   Royal P&O Nedlloyd’s operating loss on logistics and other activities narrowed to $1 million in the first half, from $5 million. Revenues from these activities increased 6 percent to $420 million.
   P&O Nedlloyd said freight rate increases were strong in the European north/south trades, while the Asian trades benefited from continued growth in manufacturing in Asia.
   P&O Nedlloyd’s transatlantic rates rose 11 percent to $1,671 per TEU, although the carrier reduced its transatlantic volume.
   In the transpacific, P&O Nedlloyd reported average rates of $1,579 per TEU, virtually unchanged from the $1,572-per-TEU average a year earlier, and boosted its volume 16 percent to 327,000 TEUs.
   Like other carriers, P&O Nedlloyd absorbed increase in costs in container shipping. About a quarter of the 10-percent year-on-year rise in average dollar unit costs was due to the effect of the weak U.S. dollar. Other significant factors were higher charter costs and the worsening imbalance in the major Asian container trades, the carrier said. Average bunker costs in the first half was $205 per ton, 24 percent more than a year earlier after taking account of hedging.