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NOL Hapag-Lloyd acquisition plan to remain untouched by cutbacks

NOL Hapag-Lloyd acquisition plan to remain untouched by cutbacks

Singapore: APL parent company NOL has announced that it is to cut back expansion plans after profit fell 19% to $75.8m on high fuel costs. "The second quarter was impacted by a large run-up in bunker costs and a deterioration in core rate levels in the Asia-Europe route," Ron Widdows (pictured), NOL president and ceo said.

However, the company, which has been invited to continue into the next phase of the bidding process for the sale of Hapag-Lloyd, maintained that that financing the deal posed no problem. "Our balance sheet remains strong, so financing an acquisition will not be an issue for us if we do enter a deal," said Cedric Foo, NOL chief financial officer. "The process is still ongoing, and we should not make any assumptions whether or not we will enter into a deal."

If successful, NOL would integrate its APL container shipping business with Hapag-Lloyd, which would create the world's third-largest container carrier. However, analysts are concerned that this acquisition comes at a time when most liner companies, APL included, are cutting back on capacity in order to remain profitable.

This week Widdows announced that the company would increase cargo box capacity by 9% this year against an earlier plan of 16% as global economies slow. He added that NOL could "further adjust" the expansion by not chartering ships and taking other measures.  [08/08/08]