Revenue down 38%; group expects loss for full year to be significant
By NISHA RAMCHANDANI
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(SINGAPORE) Shipping giant Neptune Orient Lines (NOL) registered a net loss of US$146 million for the second quarter ended June 26 against a profit of US$76 million in the corresponding quarter last year, as the global economic recession continued to take its toll on performance.
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| Mr Widdows: Business conditions still depressed, will affect performance |
And while the third quarter is traditionally stronger for the group, NOL still 'expects to post a significant full year loss', it said.
Revenue for Q209 slid 38 per cent to US$1.39 billion, down from US$2.24 billion previously, as revenue from its container shipping business took a hit.
For H109, net loss came in at US$391 million, versus a profit of US$196 million in H108, while revenue fell 37 per cent to some US$2.93 billion.
'Although volumes and operating performance improved in the latter months of the first half, business conditions remained depressed, and this continued to impact our financial performance,' said CEO Ronald Widdows.
During the quarter, revenue from its container shipping unit APL took a 39 per cent tumble year on year to US$1.2 billion as volumes declined by 19 per cent year on year to 489,000 forty-foot equivalent units (FEUs) and freight rates worsened in key trade lanes.
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Average revenue per FEU declined 24 per cent to US$2,277/FEU from US$3,014/FEU in Q208, on the back of lower bunker fuel cost recovery and continued decline in freight rates, especially for Asia-Europe and Intra-Asia long haul.
Fifteen ships are currently laid up - which represent some 12-14 per cent of NOL's fleet - and there are no concrete plans to bring these ships back into service right now, said Eng Aik Meng, president of APL, in response to questions at a briefing yesterday morning.
However, where volume mix is concerned, the intra-Asia trade mix grew as demand from other East/West trades dropped. Intra Asia trade contributed 39 per cent of total volumes in 2Q09, as opposed to 34 per cent in Q208.
Revenue from its logistics business dropped 39 per cent year on year to US$195 million due to both lower volumes across the various logistics services and lower freight rates in the forwarding business segment.
Its terminals business segment posted a 28 per cent fall in revenue to US$100 million for the quarter as a result of weaker global container trade worldwide.
Meanwhile, the company is using a portion of the US$960 million raised from its rights issue to repay debt, while the remainder will be channelled towards acquisitions.
However, NOL said that it does not have specific investment opportunities in mind at this point.
The funds from the rights issue have also helped strengthen the balance sheet by lowering pro-forma net gearing to 0.08x as at June 26, 2009, compared to 0.33x as at December 26, 2008.
NOL rose to an intra-day high of $1.73 at 9.01 am yesterday, before sinking to a low of $1.66 at 10.58am and finally closing, unchanged, at $1.69.
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