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NOL plunges back into the red in Q3

NOL plunges back into the red in Q3
Neptune Orient Lines (NOL) return to the black in Q2 has proved to be short-lived with it reporting a $96m net loss for the third quarter.

The third quarter result compares to a $23m loss in the same quarter in 2014. NOL had narrowly moved back into the black in Q2, even before the one-time gain from the sale of APL Logistics, with a $3m profit.

For the first nine months of the year NOL a loss of $104m, excluding the $887m gain from the sale APL Logistics, the company’s only profitable business.

NOL’s third quarter revenues reflected the sharp down in container shipping freight rates with a 22% decline in revenues year-on-year to $4.13bn compared to $5.29bn the same period a year earlier. Year-to-date revenues were down 26% at $4.74bn compared to $6.39bn in the first nine months of 2014.

The average box rates of container line APL showed a drop of 21% in Q3 2015 at $1,847 per feu, compared to $2,343 per feu a year earlier. Volumes also dropped 11% year-on-year to $577m in Q3 2015, compared to $646m in the same period in 2014.

On the drop in volumes the company said that: “APL attributed to various reasons, including a significant drop in US exports and weak demand in the Intra-Asia short-sea market. APL also voided sailings in response to weak global demand and trimmed capacity in unprofitable trade lanes.”

Even claimed cost savings of $335m year-to-date failed to turn around the tide of falling container freight rates.

Commenting on the results NOL group president and ceo Ng Yat Chung, said: “The absence of the traditional third quarter peak season in Europe and North America led to severe freight rates erosion in major trade lanes. We continued to make good progress in managing costs. Unfortunately, this was more than offset by weak global demand and huge contraction in freight rates.”

NOL is reportedly up for sale by its main shareholder, Singapore government investment company Temasek Holdings. These reports have neither specifically confirmed or denied by NOL and recent reports also indicate no bidders have come forward for the container line.