NOL Group Report Further Losses of $254 million

The container shipping business faces continued uncertainty due to global economic conditions.

Neptune Orient Lines Limited (NOL) has reported losses for the fifth consecutive quarter, according to company results posted today.

The Singapore-based NOL Group announced a loss of $254 million for Q1, compared to $10 million loss for the same period in 2011.

The company blamed weak performance on rising fuel costs and low freight rates, but made savings of $100 million by reducing fuel consumption and improving operational costs, and predicted they will meet targets to save $500 million for 2012.

Streamlining 

NOL said continued restructuring within the group and streamlining the businesses would net additional savings of $70 million from 2013 going forward.

APL Logistics, NOL’s supply chain management business saw a 7% increase in revenue to $394 million for Q1, mainly due to a 15% rise in demand for rail and land-based services by the automotive industry.

But NOL’s liner shipping business, American President Lines Ltd. (APL), reported a drop in earnings of 4% to $2 billion compared to Q1 last year and attributed this to fuel hikes, lower freight rates and a 7% decline in revenue for FEU (forty-foot equivalent units).

APL President Kenneth Glenn said, “Rates have been moving since March, but not yet enough to offset the high cost of fuel.”

NOL Group President and CEO Ng Yat Chung, who joined the company in October 2011 said there had been “positive signs” in Q1 citing increased freight rates in March and growth in APL Logistics. "But we must continue to aggressively manage our operating costs, and streamline our organization for greater efficiency."

However, the company said the outlook remains uncertain, and if global economic conditions continue to impact the container shipping industry, “the Group’s financial performance will remain weak.”