Singapore's NOL Reports $98M Loss in Q1 as Rates Fell

Ng said the company will continue to focus on operational efficiency

Neptune Orient Lines (NOL Group) reports a $98 million loss in the first quarter of 2014, compared with a $76 million profit in Q1 2013, saying efficiency gains failed to make up for falling freight rates.

The company's revenues fell 4 percent to $2.3 billion year-over-year, but core earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to $33 million from $5 million.

"Operating conditions in the first quarter had been difficult, with severe weather disruptions in Europe and North America," said President and CEO Ng Yat Chung.

"This compounded the challenges posed by continued excess capacity in the container shipping business."

NOL's main business, container shipping line APL, reduced its cost per sales per forty-foot-equivalent unit (FEU) by 6 percent, partly through efficiency improvements.

"APL's emphasis on capacity management, as well as savings in areas such as bunker consumption and vessel and voyage operations, helped cushion the impact of falling freight rates in this year's first quarter," said APL President Kenneth Glenn.

"As more of our newbuildings come on stream in the following months, along with the scheduled return of less efficient chartered tonnage, we are on track to continue lowering slot costs and further strengthen our competitiveness."

Looking forward, Ng said oversupply of shipping capacity will remain an issue in the container shipping industry.

"The Group aims to improve its financial performance in 2014, through its continued focus on cost discipline and drive for operational efficiency," he said.

"We will also seek growth opportunities, particularly in our logistics business."

APL has said larger, more efficient ships and a shift away from chartered vessels have helped it weather difficult container shipping markets.