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NOL bucks the credit crunch

NOL bucks the credit crunch

Singapore: In the midst of what economists have described as a slowdown in the global economy, Neptune Orient Lines (NOL) has reported a 183% increase in net profit for the first quarter of 2008 (1Q08) to $121m as compared to the same period the year before. Earnings before tax for the global container shipping, terminals and logistics group also saw a substantial increase to $137m, up 114% on the prior year, while revenue rose year-on-year by 27% to $2.41bn.  

"Our increased revenue clearly shows our Group is well positioned in a growth industry," said NOL Group president and ceo, Dr Thomas Held (pictured). 'At a time of economic uncertainty and unprecedented fuel costs, we have again illustrated the viability of our business model and our strong focus on cost management." He added that the group expects the market to remain challenging with cost pressures impacted by escalating fuel prices.

Despite a a 2% fall in US West Coast volumes, APL, the group's container shipping business contributed $2bn in revenue to total earnings, having carried a total of 662,900 FEU (forty-foot equivalent unit) during 1Q08 (14% more in cargo than seen in 1Q07).

APL has attributed the 16% increase in its overall Transpacific volumes to increased backhaul volumes and to US East Coast cargoes rising as a proportion of total Transpacific liftings. Additionally, Intra-Asia volumes saw a growth of 12% for the period.  

In contrast, revenues at NOL's Terminals business activities fell 6% to $145m on poretax earnings of $12m, compared with $21m in the same period of 2007. "Some softening of demand in the Transpacific West Coast trade coupled with network optimisation initiatives resulted in lower volumes at our US West Coast terminals," said Dr Held. "This impacted the contribution of our Terminals activities. In the mid to longer term, we expect West Coast volumes to recover. We continue to be focused on increasing utilisation and improving the productivity of all aspects of our Terminals. The long-term demand outlook for the sector remains very positive."

NOL's revenues from its logistics activities rose 12% to $363m on pre-tax earnings of $17m, placing it among the more profitable logistics service providers. Dr Held has stated that the group aims to increase logistics' contribution to its bottom line.  [16/05/08]