NOL hits first profit in two years

10/26/2012

Singapore-based NOL Group, which owns the liner shipping and logistics operator APL, has returned to profitability, posting its first quarterly surplus since the fourth quarter of 2010.

The turnaround reflected a strengthening in freight rates in the carrier’s core tradelanes during the first half of 2012 and the early weeks of the third quarter, effective and ongoing cost reduction measures and a modest improvement in traffic, up 1% in the third quarter of this year to 707,000feu. This compared with 699,000feu in the same period of 2011.

Net profit for the quarter reached US$50 million and compared with a net loss of $91 million last year. 

The strong recovery was achieved on the back of a 4% rise in turnover, with the $2.3 billion comparing with $2.2 billion in 2011.

APL’s liner division accounted for more than 85% of turnover and while the total was up 3% on 2011, it was down 2% on the $2 million posted in in the second quarter. This reflected a slight fall in average revenue per teu between the two halves of 1%.

Clearly, the significant rise in freight rates achieved by ocean carriers in the first six months of the year, particularly on the Asia-Europe trade, had started to soften again as the peak season failed to materialise and cargo volumes softened.

This suggests the fourth quarter may prove more challenging and the carrier’s network efficiency drive will be even more significant as the year draws to a close.

Commenting on the third-quarter performance, APL president Kenneth Glenn said: “We were able to move more with a smaller fleet capacity and reduced bunker fuel consumption.

“This, coupled with our fleet modernisation programme, were the reasons our unit costs improved significantly, and we believe these initiatives position us well into the future.”

Group-wide, the statement accompanying the results said: “The macro-economic outlook remains weak and the container shipping industry continues to face overcapacity and high fuel prices.”