NOL Posts First Quarterly Profit Since 2010

APL said it continued to benefit from efficiency gains.

Neptune Orient Lines Limited (NOL) said Thursday it made a net profit of $50 million in the third quarter of 2012, marking a return to quarterly profits after losses in the previous six.

The Singapore based container shipping and logistics group attributed its first positive result since 2010 to increased cost efficiencies, stable rates, and volume growth.

"Our efforts to improve the Group's competitive position are paying off," said NOL Group CEO Ng Yat Chung.

In the third quarter NOL said its cost saving Efficiency Leadership Program that includes slow steaming saved it $59.4 million in bunker costs, 44 percent of the total $135 million savings from the program in the period.

The price paid for bunkers rose 13 percent year-on-year to $674 per metric tonne (pmt), it said, and to deal with rising bunker prices will continue to recover part of its fuel price increases from customers through bunker adjustment factors as well as continuing with its policy of hedging its bunker exposures.

Efficiency Gains

APL, NOL's liner shipping business, reported its earnings before income and tax (EBIT) was a profit of $55 million in the third quarter, compared to a loss of $88 million in the same period a year ago, saying it continued to benefit from efficiency gains in its operational network.

"We were able to move more with a smaller fleet capacity, and reduced bunker fuel consumption," said APL President Kenneth Glenn.

"These efficiency gains, coupled with our fleet modernization programme, are the reasons our unit costs have improved significantly. We believe these initiatives position us well into the future."

Looking ahead, NOL said the outlook remains weak and the container shipping industry continues to face overcapacity and high fuel prices.

"Going forward, maintaining focus on the fundamentals of our business  – service quality, operational efficiency and cost discipline – will be key to improving performance," said Ng Yat Chung.

While NOL said it will continue to make further operational efficiencies, it still expects to post a full year loss.

The firm also announced it has sold its Singapore headquarters building at 456 Alexandra Road for S$380 million ($311 million).