Neptune Orient container-ship unit posts first profit since 2010
Neptune Orient Lines Ltd. (NOL) said its container-shipping arm, Asia’s third-biggest, had the first quarterly profit since 2010 because of higher freight rates and cost-savings, Bloomberg reports.
APL Ltd. posted core earnings before interest and taxes of $7 million in the three months through June, Singapore-based NOL said in a statement today. The group’s logistics division had a $9 million profit on the same basis. The group net loss was $118 million, weighed down by $112 million of restructuring charges.
The shipping unit’s average freight rates rose 3 percent in the second quarter as lines boosted cooperation and ended price wars that caused indsutrywide losses last year. NOL has also found $225 million of annual cost-savings as it works toward a $500 million goal.
“Market conditions improved in the second quarter but just as important were the steps we took to improve efficiency,” APL President Kenneth Glenn said in the statement. “We expect further improvement as we continue to bring fuel-efficient ships into the fleet and optimize our network.”
NOL’s sales rose 8 percent in the second quarter to $2.3 billion. The company was expected to make a net loss of $41.1 million, based on the average of five analyst estimates compiled by Bloomberg.
Spot prices for hauling containers to Europe from Asia increased 14 percent in the second quarter after more than doubling in the previous three months, based on weekly indexes compiled by the Shanghai Shipping Exchange. Rates for the U.S. west coast increased 27 percent in the three months ended June.
APL’s cost-savings included a $19 million first-half reduction in how much it spent returning empty containers to Asia, according to the statement. NOL has also announced plans to sell its Singapore headquarters to raise funds for investments.
The company rose 1.3 percent to close at S$1.22 in Singapore trading before the earnings statement. It has advanced 8 percent this year, compared with a 15 increase for the benchmark Straits Times Index.
Shipping lines, including APL and A.P. Moeller-Maersk A/S, raised Asia-Europe rates once in the first quarter and three times in three months ended June.
On Asia-U.S. routes, 15 lines including APL set a $500 per box guideline for increases in annual contracts starting after May, the Transpacific Stabilization Agreement said in February.