[080516.EN.SEA] NOL Posts Quarterly Loss Of US$105 Million On Cusp of CMA CGM Takeover

SINGAPORE's Neptune Orient Lines (NOL), on the cusp of its takeover by French container shipping giant CMA CGM, widened a first quarter net loss 875 per cent year on year to US$105 million, drawn on revenues of $1.13 billion, which fell 43 per cent.

NOL's principal holding, container line APL, narrowed year-on-year operating profit decline 84 per cent to $18 million, drawn on revenues of $1.13 billion, down 29 per cent.

Average revenue per FEU was reported at $1,594, down 23 per cent year on year on a quarterly volume of 624 FEU, down six per cent.

"Worsening overcapacity in 2015 hit the industry well into first quarter," said NOL president and CEO Ng Yat Chung.

"Freight rates which declined across major trade lanes to historic low are expected to remain weak in the face of slower demand growth," he said.

"While APL continues to make progress in taking out costs and improving yield, the proposed acquisition of APL by CMA CGM will help APL achieve scale to stay competitive in the industry," Mr Ng said.

Against a backdrop of weak global demand and excess capacity in the industry, APL's first quarter year-on-year volume fell six per cent due mainly to weak backhaul volume, while average freight rates fell 23 per cent during the same period.

"As a result, said the company, APL's 1Q 2016 revenue contracted 29 per cent from the year before to US$1.14 billion," said the company statement.

APL deployed capacity in a way to keep its headhaul asset utilisation rate above 90 per cent.

APL also stayed focused on its rigorous cost management and yield-focused trade strategy that emphasised network rationalisation and better cargo selection.

APL achieved cost savings of $60 million. Coupled with savings through a lower bunker price, APL's total cost of sales per FEU fell 16 per cent year on year.

Source : HKSG.