NOL first half net profit up 45% to US$196 million
Global container shipping, terminals and logistics group Neptune Orient Lines (NOL) yesterday reported a net profit for the first half of 2008 (1H08) of US$196 million, a rise of 45% over the same period of 2007 (1H07). 1H08 EBIT was US$229 million, 30% higher than 1H07. For the second quarter of 2008 (2Q08), a period marked by deteriorating market condition and significant cost pressures, the company reported a net profit of US$76 million (19% lower than 2Q07) and EBIT of US$92 million (down 18% on 2Q07).
Revenues for 1H08 were up 25% to a record US$4.64 billion. 2Q08 revenues rose by 24% to US$2.24 billion over the same period of 2007.
Announcing the results, NOL Group Chairman, Mr Cheng Wai Keung, said: "Our results for the year to date show a good financial performance in the first quarter and reflect the more difficult business environment experienced in the second quarter."
"As a result of the healthy operating cash flows generated, the NOL Group’s balance sheet continues to be in a strong position, with net gearing at 0.24 times."
The NOL Board of Directors has approved an interim tax-exempt (one-tier) dividend of 4 Singapore cents per share to be paid on 5 September 2008.
NOL Group President and Chief Executive Officer, Mr Ron Widdows, said: "The Group has reported a positive operational and financial performance for the first half, despite a significantly more challenging business landscape."
"The second quarter was impacted by a large run up in bunker costs and a deterioration in core rate levels in the Asia-Europe trade."
"At the top line, the company has generated more than US$900 million in additional revenue for 1H08 compared to the same period last year, showing the benefits of higher volumes carried and a focused approach to fuel cost recovery."
"A major achievement was the outcome of Transpacific contracting where we implemented floating bunker fuel surcharges on a majority of customer contracts that took effect in May. Overall, the company's bunker recovery was much higher than in the previous year."
BUSINESS SECTOR FOCUS
NOL's core Container Shipping business, APL, saw revenues rise 32% to US$3.94 billion for 1H08, and 31% for 2Q08, at US$1.92 billion. 2Q08 average revenue per FEU of US$3,014 was 14% higher than for 2Q07. This largely reflected higher bunker adjustment factor (BAF) collections.
APL carried record volumes of 1.27 million FEU (forty-foot equivalent unit) in 1H08. This was 13% more than in 1H07, with volume increases in most major trade lanes.
The Container Shipping unit reported EBIT for 1H08 of US$168 million, up 60% on 1H07. 2Q08 EBIT of US$60 million was 22% lower than for 2Q07.
Mr Widdows said: “The combination of continuing growth in container volumes, and effective yield management enabled APL to deliver an improved earnings performance for the half year, although there was a decline in the results for the second quarter. Costs, particularly for fuel, have continued to escalate.”
The APL Logistics unit recorded a 9% improvement in 1H08 revenues to US$681 million, with 2Q08 up 6% at US$318 million.
Logistics’ EBIT grew by 15% year-on-year to US$30 million, as a result of improved margins and effective cost management. For 2Q08, EBIT was US$13 million compared to US$14 million in 2Q07.
The Logistics business continued to grow revenues that support its network of products and services closely aligned with the Group’s Container Shipping business. Accelerated growth in the APL IndiaLinx™ rail freight service, new business wins in contract logistics, and the success of the new APL Guaranteed™ time-definite product contributed to the results for the period.
The Terminals unit reported revenues of US$283 million for 1H08 and US$138 million for 2Q08, down 6% and 5% year-on-year, respectively. Terminals' EBIT for 1H08 was US$31 million, down 30%. 2Q08 EBIT of US$19 million was 17% lower than for 2Q07.
Terminals' performance reflected the significant industry-wide reduction of container flows over the US West Coast. There were stronger volumes over the US East Coast as shippers looked to diversify the gateways they use to protect supply chains against potential problems on the West Coast.
Mr Widdows reiterated that the long-term demand outlook for terminals remains positive and said that NOL is taking steps to grow its Terminals portfolio to support the growth of Container Shipping.
Revenues for 1H08 were up 25% to a record US$4.64 billion. 2Q08 revenues rose by 24% to US$2.24 billion over the same period of 2007.
Announcing the results, NOL Group Chairman, Mr Cheng Wai Keung, said: "Our results for the year to date show a good financial performance in the first quarter and reflect the more difficult business environment experienced in the second quarter."
"As a result of the healthy operating cash flows generated, the NOL Group’s balance sheet continues to be in a strong position, with net gearing at 0.24 times."
The NOL Board of Directors has approved an interim tax-exempt (one-tier) dividend of 4 Singapore cents per share to be paid on 5 September 2008.
NOL Group President and Chief Executive Officer, Mr Ron Widdows, said: "The Group has reported a positive operational and financial performance for the first half, despite a significantly more challenging business landscape."
"The second quarter was impacted by a large run up in bunker costs and a deterioration in core rate levels in the Asia-Europe trade."
"At the top line, the company has generated more than US$900 million in additional revenue for 1H08 compared to the same period last year, showing the benefits of higher volumes carried and a focused approach to fuel cost recovery."
"A major achievement was the outcome of Transpacific contracting where we implemented floating bunker fuel surcharges on a majority of customer contracts that took effect in May. Overall, the company's bunker recovery was much higher than in the previous year."
BUSINESS SECTOR FOCUS
NOL's core Container Shipping business, APL, saw revenues rise 32% to US$3.94 billion for 1H08, and 31% for 2Q08, at US$1.92 billion. 2Q08 average revenue per FEU of US$3,014 was 14% higher than for 2Q07. This largely reflected higher bunker adjustment factor (BAF) collections.
APL carried record volumes of 1.27 million FEU (forty-foot equivalent unit) in 1H08. This was 13% more than in 1H07, with volume increases in most major trade lanes.
The Container Shipping unit reported EBIT for 1H08 of US$168 million, up 60% on 1H07. 2Q08 EBIT of US$60 million was 22% lower than for 2Q07.
Mr Widdows said: “The combination of continuing growth in container volumes, and effective yield management enabled APL to deliver an improved earnings performance for the half year, although there was a decline in the results for the second quarter. Costs, particularly for fuel, have continued to escalate.”
The APL Logistics unit recorded a 9% improvement in 1H08 revenues to US$681 million, with 2Q08 up 6% at US$318 million.
Logistics’ EBIT grew by 15% year-on-year to US$30 million, as a result of improved margins and effective cost management. For 2Q08, EBIT was US$13 million compared to US$14 million in 2Q07.
The Logistics business continued to grow revenues that support its network of products and services closely aligned with the Group’s Container Shipping business. Accelerated growth in the APL IndiaLinx™ rail freight service, new business wins in contract logistics, and the success of the new APL Guaranteed™ time-definite product contributed to the results for the period.
The Terminals unit reported revenues of US$283 million for 1H08 and US$138 million for 2Q08, down 6% and 5% year-on-year, respectively. Terminals' EBIT for 1H08 was US$31 million, down 30%. 2Q08 EBIT of US$19 million was 17% lower than for 2Q07.
Terminals' performance reflected the significant industry-wide reduction of container flows over the US West Coast. There were stronger volumes over the US East Coast as shippers looked to diversify the gateways they use to protect supply chains against potential problems on the West Coast.
Mr Widdows reiterated that the long-term demand outlook for terminals remains positive and said that NOL is taking steps to grow its Terminals portfolio to support the growth of Container Shipping.