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NOL slumps to $98m Q1 loss, overcapacity continues to take its toll

NOL slumps to $98m Q1 loss, overcapacity continues to take its toll
There was little cheer for Neptune Orient Lines (NOL) as it slumped to a $98m net loss in the first quarter as container shipping overcapacity continues to take its toll.

The first quarter loss reversed a $76m profit in the same period in 2013, however, that included a $200m one-time gain from the sale of its Singapore headquarters with the company moving to rented office space this month. NOL’s core EBIT saw a $65m loss in the first quarter of 2014, against a $76m loss in the same period last year.

Revenues in the first quarter fell by 4% year-on-year to $2.28bn.

“Operating conditions in the first quarter had been difficult, with severe weather disruptions in Europe and North America. This compounded the challenges posed by continued excess capacity in the container shipping business,” said NOL Group president and ceo Ng Yat Chung.

NOL’s main business, container line APL recorded an $83m core EBIT loss, a 10% improvement on last year. NOL’s strategy going forward continues to stress cost savings and efficiency and the company reduced cost of sales by 6% per feu in Q1 and volumes grew 2%, however, average revenue per feu also dropped by 6%.

“APL’s emphasis on capacity management, as well as savings in areas such as bunker consumption and vessel and voyage operations, helped cushion the impact of falling freight rates in this year’s first quarter,” said APL President Kenneth Glenn. “As more of our newbuildings come on stream in the following months, along with the scheduled return of less efficient chartered tonnage, we are on track to continue lowering slot costs and further strengthen our competitiveness.”

NOL’s other business APL Logistics reported a 13% jump in core EBIT profit to $18m from $15m in the same period a year before.

Looking ahead Ng said: “The group aims to improve its financial performance in 2014, through its continued focus on cost discipline and drive for operational efficiency. We will also seek growth opportunities, particularly in our logistics business.”

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