[EN-SEA] "NOL" Suffers USD 741 Million Loss as Box Rates Fell 28pc Over 2009

SINGAPORE's Neptune Orient Lines (NOL) has announced a US$741 million full-year loss for 2009 with revenues dropping 30 per cent to $6.5 billion.
NOL, which owns container carrier APL, announced a fourth-quarter loss of $211 million against a $149 million decline in the last quarter of 2008, a fall blamed mostly on weak container shipping, which posted pre-tax losses $731 million with revenues down 31 per cent year on year to $5.5 billion.

APL volumes in 2009 declined seven per cent year on year to 2.3 million FEU (the FEU, rather than the TEU is the preferred unit of account at NOL).

"Some shifts in the volume mix occurred, with the Asia/Middle East segment contributing 39 per cent of total volumes over the course of the year, compared to 35 per cent in 2008," said the statement accompanying the results.

In the fourth quarter, volumes increased 28 per cent to 733,000 FEU year on year with the improvement due to more lifting in major trade lanes. Average revenue per FEU decreased though by 25 per cent and 28 per cent respectively for the corresponding quarters, due to "lower core freight rates and lower bunker fuel cost recovery as well as changes in trade mix".

APL achieved an average vessel utilisation rate of 89 per cent across 2009, and 93 per cent for the last quarter. Overall revenue for APL for 2009 was $5.5 billion, down year on year by 31 per cent while quarterly revenue of $1.7 billion was 14 per cent lower year on year.

Revenue per container fell 25 per cent year on year and 28 per cent in the fourth quarter, a factor blamed on "lower core freight rates and lower bunker fuel cost recovery as well as changes in trade mix", said the statement.

"The 2009 results were disappointing, and show the impact of sharp falls in demand and freight rates, especially in the first half of the year. This is evident from the dramatic reduction in annual revenue," said NOL chief executive Ron Widdows.

"Through the later part of 2009, improved volumes and active capacity management led to higher utilisation rates, but earnings remained depressed, due to low freight rates which continued below levels which enable full cost recovery," he said.

NOL terminals were profitable despite lower volumes at terminals, reflecting a revenue decline of 13 per cent to $503 million, but showing pre-tax profits of $32 million against 2008's earnings of $72 million.

But the company remains optimistic: "In early 2010, there have been improvements in volumes and asset utilisation in NOL's principal markets," said the statement. "In addition, freight rates have stabilised, and trended upwards in some trades. If these conditions continue, better business performance is possible."

But higher fuel costs remain a worry, the statement said. "The group will continue to pursue strategies which reflect the current operating environment, including the achievement of cost-savings and improved asset utilisation, yields and productivity," it said.

Said NOL chairman Cheng Wai Keung: "2009 was a most demanding year. We witnessed a worldwide economic downturn of unprecedented scale and, as a consequence, experienced a major slowdown in global trade. In the face of very difficult market circumstances, the group has reported a substantial loss."

Source : HKSG, 13.02.10.