Global container shipping, terminals and logistics group Neptune Orient Lines (NOL) today announced a net loss of US$741 million for 2009, compared with a net profit of US$83 million for 2008.
For the fourth quarter of 2009 (4Q09), NOL recorded a net loss of US$211 million, compared to a net loss of US$149 million for the fourth quarter of 2008 (4Q08).
At the Core EBIT level NOL posted a loss of US$651 million for 2009, compared to a profit of US$213 million for 2008. Core EBIT for 4Q09 was a loss of US$183 million, compared with a Core EBIT loss of US$45 million for the corresponding period in 2008.
Revenue for 2009 was down year-on-year by 30% to US$6.5 billion.
NOL Group Chairman, Mr Cheng Wai Keung, said: “2009 was a most demanding year. We witnessed a worldwide economic downturn of unprecedented scale and, as a consequence, experienced a major slowdown in global trade. In the face of very difficult market circumstances, the Group has reported a substantial loss.”
NOL announced last year that its new policy is to pay annual dividends of 20% of net profits after tax. Therefore, no dividends will be paid for the financial year 2009.
NOL Group President and Chief Executive Officer, Mr Ronald D. Widdows, said: “The 2009 results were disappointing and show the impact of sharp falls in demand and freight rates, especially in the first half of the year. This is evident from the 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.”
“The Logistics and Terminals businesses contributed positively to the Group’s performance.”
“Towards the end of the year, NOL achieved a stronger market position in a number of key liner shipping trades with better volumes and freight rates.”
“The Group has continued paying attention to the fundamentals – providing excellent reliability and customer service, reducing costs, increasing efficiency and maintaining the strength of the balance sheet. The NOL Group is positioned to take advantage of an improving market environment.”
Business segments
Overall volumes carried by NOL’s Container Shipping business, APL, for 2009 declined year-on-year by 7% to 2.3 million FEU (forty-foot equivalent unit). Some shifts in the volume mix occurred, with the Asia/Middle East segment contributing 39% of total volumes over the course of the year, compared to 35% in 2008.
For 4Q09, volumes increased by 28% 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% and 28% 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% across 2009, and 93% for 4Q09.
Overall revenue for APL for 2009 was US$5.5 billion, down year-on-year by 31%. 4Q09 revenue of US$1.7 billion was 14% lower than 4Q08.
APL posted a Core EBIT loss of US$731 million for the year. For 4Q09 the Core EBIT loss was US$212 million, compared to a loss of US$84 million in 4Q08. The increase in the 4Q09 Core EBIT loss as compared to the 3Q09 Core EBIT loss of US$140 million was due to a combination of a longer 4Q09 by two weeks and additional costs associated with a larger operating fleet including voyage and bunker costs. APL’s 4Q09 EBIT loss was also affected by non-recurring costs relating to restructuring.
In the Terminals business segment, revenue of US$503 million was achieved for 2009, a year-on-year decrease of 13% due to lower overall volume throughput. 4Q09 revenue was 14% higher than for 4Q08, reflecting improved Container Shipping volumes. Terminals’ Core EBIT for the year was US$32 million, compared with US$72 million in 2008.
APL Logistics achieved 2009 revenue of US$976 million, a year-on-year decrease of 26%. 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 US$306 million, down 7% compared to 4Q08. Logistics achieved Core EBIT of US$54 million for 2009, a decline of 16% year-on-year, mainly due to lower volumes and revenues.
Outlook
At our 3Q09 results announcement, NOL indicated continuing losses in the first half of 2010. In early 2010, there have been improvements in volumes and asset utilisation in NOL’s principal markets. In addition, freight rates have stabilised and trended upwards in some trades. If these conditions continue, better business performance is possible. However, significant risks remain – particularly the sustainability of demand and higher fuel costs. The Group will continue to pursue strategies which reflect the current operating environment, including the achievement of cost savings and improved asset utilisation, yields and productivity.
For the fourth quarter of 2009 (4Q09), NOL recorded a net loss of US$211 million, compared to a net loss of US$149 million for the fourth quarter of 2008 (4Q08).
At the Core EBIT level NOL posted a loss of US$651 million for 2009, compared to a profit of US$213 million for 2008. Core EBIT for 4Q09 was a loss of US$183 million, compared with a Core EBIT loss of US$45 million for the corresponding period in 2008.
Revenue for 2009 was down year-on-year by 30% to US$6.5 billion.
NOL Group Chairman, Mr Cheng Wai Keung, said: “2009 was a most demanding year. We witnessed a worldwide economic downturn of unprecedented scale and, as a consequence, experienced a major slowdown in global trade. In the face of very difficult market circumstances, the Group has reported a substantial loss.”
NOL announced last year that its new policy is to pay annual dividends of 20% of net profits after tax. Therefore, no dividends will be paid for the financial year 2009.
NOL Group President and Chief Executive Officer, Mr Ronald D. Widdows, said: “The 2009 results were disappointing and show the impact of sharp falls in demand and freight rates, especially in the first half of the year. This is evident from the 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.”
“The Logistics and Terminals businesses contributed positively to the Group’s performance.”
“Towards the end of the year, NOL achieved a stronger market position in a number of key liner shipping trades with better volumes and freight rates.”
“The Group has continued paying attention to the fundamentals – providing excellent reliability and customer service, reducing costs, increasing efficiency and maintaining the strength of the balance sheet. The NOL Group is positioned to take advantage of an improving market environment.”
Business segments
Overall volumes carried by NOL’s Container Shipping business, APL, for 2009 declined year-on-year by 7% to 2.3 million FEU (forty-foot equivalent unit). Some shifts in the volume mix occurred, with the Asia/Middle East segment contributing 39% of total volumes over the course of the year, compared to 35% in 2008.
For 4Q09, volumes increased by 28% 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% and 28% 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% across 2009, and 93% for 4Q09.
Overall revenue for APL for 2009 was US$5.5 billion, down year-on-year by 31%. 4Q09 revenue of US$1.7 billion was 14% lower than 4Q08.
APL posted a Core EBIT loss of US$731 million for the year. For 4Q09 the Core EBIT loss was US$212 million, compared to a loss of US$84 million in 4Q08. The increase in the 4Q09 Core EBIT loss as compared to the 3Q09 Core EBIT loss of US$140 million was due to a combination of a longer 4Q09 by two weeks and additional costs associated with a larger operating fleet including voyage and bunker costs. APL’s 4Q09 EBIT loss was also affected by non-recurring costs relating to restructuring.
In the Terminals business segment, revenue of US$503 million was achieved for 2009, a year-on-year decrease of 13% due to lower overall volume throughput. 4Q09 revenue was 14% higher than for 4Q08, reflecting improved Container Shipping volumes. Terminals’ Core EBIT for the year was US$32 million, compared with US$72 million in 2008.
APL Logistics achieved 2009 revenue of US$976 million, a year-on-year decrease of 26%. 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 US$306 million, down 7% compared to 4Q08. Logistics achieved Core EBIT of US$54 million for 2009, a decline of 16% year-on-year, mainly due to lower volumes and revenues.
Outlook
At our 3Q09 results announcement, NOL indicated continuing losses in the first half of 2010. In early 2010, there have been improvements in volumes and asset utilisation in NOL’s principal markets. In addition, freight rates have stabilised and trended upwards in some trades. If these conditions continue, better business performance is possible. However, significant risks remain – particularly the sustainability of demand and higher fuel costs. The Group will continue to pursue strategies which reflect the current operating environment, including the achievement of cost savings and improved asset utilisation, yields and productivity.