Asia/Pacific News
Improved Fuel Consumption Gives APL First Profit Since 2010
APL, the container shipping line of Singapore based Neptune Orient Lines Limited (NOL) [SGX:N03] has reported second quarter Core Earnings Before Interest and Taxes (EBIT) of USD $7 million in its Q2 2012 results report compared to a loss of USD $53 million in Q2 2011.
It is the first time since the fourth quarter of 2010 that the shipping business has been profitable.
NOL said that "fuel efficiency accounted for much of the cost savings," with fuel use being reduced by 7% in the first half of 2012 versus a year ago despite a 4% increase in cargo volume.
"We expect further improvement as we continue to bring fuel-efficient ships into the fleet and optimise our network," said APL President Kenneth Glenn.
APL second quarter revenues rose to USD $2 billion in the quarter, up 7% compared to a year ago and were attributed to increased freight rates and volume growth.
"Difficult but necessary" one-time charges of USD $112 million for organisational restructuring and the sale of obsolete vessels to make room for more efficient ships led to the NOL Group making an overall loss of USD $118 million in the quarter, a 107% decrease from Q2 2011's loss of USD $57 million.
"We need a more efficient organisation and a more modern, cost-competitive fleet to deal with the oversupply situation in the container shipping industry," said NOL Group CEO Ng Yat Chung.
APL Logistics, NOL's supply chain management business, reported second quarter EBIT of USD $9 million down 25% from Q2 2011 despite revenues rising 15% from a year ago to USD $361 million.
NOL said the slide was partly attributed to investments to improve technology products and commercial infrastructure.
Looking ahead, NOL said its financial performance will depend on freight rates, global economic position, over-capacity in container shipping and fuel prices, and "the outlook for these factors remains uncertain," it said.
