Royal P&O Nedlloyd recovers
Royal P&O Nedlloyd, the Dutch company that has owned 100 percent of P&O Nedlloyd Container Line since April, Thursday reported net profit of $107 million for the third quarter, up from $24 million a year ago.
The improved results came from the higher profits earned by P&O Nedlloyd Container Line in the latest quarter, and from the increased shareholding of Royal P&O Nedlloyd in the container shipping line. Until March, it owned 50 percent of P&O Nedlloyd Container Line.
On a like-for-like basis, P&O Nedlloyd Container Line’s container shipping business made a third-quarter operating profit of $132 million, up from $56 million for the same period in 2003, thanks to higher cargo volumes and higher freight rates. P&O Nedlloyd Container Line’s logistics and other activities earned an operating profit of $6 million in the latest quarter, as compared to a loss of $3 million a year earlier. Total operating profit rose 160 percent to $138 million in the third quarter from $53 million.
“This is another encouraging result for P&O Nedlloyd and brings our operating profit for the year to date to $259 million,” said Philip Green, chief executive officer of Royal P&O Nedlloyd.
P&O Nedlloyd Container Line’s container shipping revenue rose 23 percent in the latest quarter to $1.6 billion, as container volume rose 12 percent to 1.1 million TEUs and average rate per TEU climbed 10 percent to $1,484 from $1,346 in the third quarter of 2003. The carrier’s operating margin as a percentage of revenue, a common industry benchmark, rose to 8 percent in the third quarter from 4 percent in the same quarter of 2004.
The carrier’s average freight rate per TEU in the Americas trades, including the transpacific and transatlantic, increased 7 percent year-on-year to $1,648 in the third quarter. The average rate in the European trades excluding the Atlantic rose 8 percent to $1,471 over the same period, and the average revenue in the Asian trades went up 23 percent to $1,317 per TEU.
“Increases in average freight rates were particularly strong in the Asia Pacific trades,” Royal P&O Nedlloyd said. “Growth in volume was strong on all routes outbound from Asia, reflecting the continued growth in offshore manufacturing in Asia.”
However, the company said average costs per TEU also increased. Third quarter cost per TEU was 5.5 percent higher than a year earlier and 2.5 percent higher than in the first half of this year. Costs per TEU continue to be affected by the relative weakness of the U.S. dollar, higher ship charter and the increasing container imbalance in the Asian trades, the Dutch-registered company said.
“Port congestion is also beginning to have an impact on operations costs,” Royal P&O Nedlloyd added.
For the first six months, Royal P&O Nedlloyd earned net profit of $182 million, as compared to a loss of $21 million in the first half of 2003.
Green said the overall environment for the industry continues to be favorable both in terms of freight rate development and volume growth.
“We anticipate further positive impact on profitability from our yield management program in 2005,” he added.
Royal P&O Nedlloyd’s stock rose 0.2 percent to 37.06 euros ($47.90) in early trading Thursday on the Euronext stock exchange.
The P&O group owns 25 percent of Royal P&O Nedlloyd.