NOL Posts Full-Year 2014 Loss of $260M Despite Cost-Cutting

Friday February 20, 2015

Singapore-based Neptune Orient Lines (NOL) reported a full-year net loss of $260 million for 2014, with its cost-management program unable to make up for ongoing difficulties with congestion at U.S. West Coast ports and falling freight rates.

While full-year revenues fell by two percent to $8.6 billion.

While the net loss widened significantly over the previous year's net loss of $76 million, in 2013 there was a non-recurring gain of $200 million from the sale of its Singapore headquarter building.

NOL said that its attempts to cut operating costs had helped the company improve its full-year core earnings before interest, taxes, depreciation, and amortisation (EBITDA) to $317 million from $150 million.

"In spite of challenging conditions, especially on the U.S. West Coast, our container shipping arm reduced its operating losses, delivering a year-on-year improvement in Core EBITDA, reflecting the progress made in its cost and efficiency drive," said CEO Ng Yat Chung.

American President Lines Ltd. (APL), NOL's container shipping business, has spent the year cutting back on its fleet capacity and enhancing its cargo selection in order to cut back on operating costs.

The efforts, along with fewer sailings due to ongoing labour troubles at along the U.S. West Coast, have caused volumes to fall by eight percent in the fourth quarter compared to the same period in 2013.

"We will maintain our focus on reducing costs, leveraging network efficiencies, and concentrating on yield management in key trade routes," said APL President Kenneth Glenn, who added that the company's cost structure would also benefit from the expiry of contracts for 19 of its chartered ships in 2015.

Earlier in the week NOL said it had sold its supply chain management business, APL Logistics.