NOL reports 2009 loss of $741 million

Global container shipping, terminals and logistics group Neptune Orient Lines (NOL) today announced a net loss of US$741 million for 2009 as falling freight rates and poor demand eroded revenue.

Even increasing demand during the fourth quarter of 2009 was not enough to hold back the red ink and the group recorded a Q4 net loss of $211 million, compared to the $149 million loss in the same period of 2008.

"In the face of very difficult market circumstances, the group has reported a substantial loss," said NOL group chairman Cheng Wai Keung.

NOL announced last year that its new policy is to pay annual dividends of 20 percent of net profits after tax. Therefore, no dividends will be paid for the financial year 2009.

NOL group president and chief executive Ron Widdows, said the 2009 results revealed the impact of sharp falls in demand and freight rates, especially in the first half, resulting in a "dramatic reduction" in annual revenue.

"Through the later part of 2009, improved volumes and active capacity management led to higher utilisation rates, but earnings remained depressed due to low freight rates which continued below levels which enable full cost recovery," Widdows said.

At the core EBIT level NOL posted a loss of $651 million for 2009, compared to a profit of $213 million for 2008. EBIT for 4Q09 was a loss of $183 million, compared with a EBIT loss of $45 million for the corresponding period in 2008.

Revenue for 2009 was down year-on-year by 30 percent to US$6.5 billion.

Overall volumes carried by NOL's container shipping business APL during 2009 declined year-on-year by 7 percent to 2.3 million FEU.

The Asia-Middle East segment contributed 39 percent of total volumes over the course of the year, compared to 35 percent in 2008.

For 4Q09, volumes increased by 28 percent to 733,000 FEU compared to 4Q08, with the improvement due to higher volumes lifted in all major trade lanes.

Average revenue per FEU decreased by 25 percent and 28 percent for 2009 and 4Q09 respectively, due to lower core freight rates and lower bunker fuel cost recovery as well as changes in trade mix.

APL achieved an average vessel utilisation rate of 89 percent across 2009, and 93 percent for 4Q09.

Overall revenue for APL for 2009 was $5.5 billion, down year-on-year by 31 percent. 4Q09 revenue of $1.7 billion was 14 percent lower than 4Q08.

In the terminals business segment, revenue of $503 million was achieved for 2009, a year-on-year decrease of 13 percent due to lower overall volume throughput.

Fourth quarter 09 revenue was 14 percent higher than for 4Q08, reflecting improved container shipping volumes. Terminals' core EBIT for the year was $32 million, compared with $72 million in 2008.

APL Logistics achieved 2009 revenue of $976 million, a year-on-year decrease of 26 percent. This was primarily due to lower volumes across various logistics services, coupled with lower freight rates in the freight forwarding business segment.

Revenue in 4Q09 was $306 million, down 7 percent compared to 4Q08. Logistics achieved core EBIT of $54 million for 2009, a decline of 16 percent year-on-year, mainly due to lower volumes and revenues.

With freight rates stabilising, end even trending upwards on some trade lanes, NOL expects better business performance.

"However, significant risks remain - particularly the sustainability of demand and higher fuel costs," NOL warned in its results report.

(source: Cargo News Asia)