Global container shipping, terminals and logistics group Neptune Orient Lines (NOL) today announced a net loss for third-quarter 2009 (3Q09) of US$139 million, compared with a net profit of US$35 million for the same period of 2008 (3Q08).

At the Core EBIT level NOL posted a loss of US$115 million for 3Q09.
Revenue for 3Q09 was down year-on-year by 34% to US$1.56 billion.
On a year-to-date basis, for the first three quarters of 2009, NOL has reported cumulative net losses of US$530 million.

Announcing the results, NOL Group President and Chief Executive Officer, Mr Ronald D. Widdows, said: “As anticipated, the third quarter saw a continuation of adverse business operating conditions.”
“Despite some improvements in certain trades, container shipping freight rates remain at uneconomic levels.”

“In this environment, NOL Group is continuing to focus on cost management, productivity improvement and service delivery.

“Following the completion of our US$1 billion share rights issue during the quarter, we are well positioned to weather the ongoing downturn in container shipping. The company’s balance sheet is strong, with net gearing at the end of the third quarter of 0.14 times and access to various committed credit facilities.”
BUSINESS SEGMENTS

For 3Q09, volumes carried by NOL’s Container Shipping business, APL, were 6% less year-on-year at 586,000 FEUs (forty-foot equivalent unit). This was due to declines in volumes in Europe and Americas trade, partially offset by growth in Asia/Middle East trade. Over the last four weeks of the quarter, volumes were 1% higher compared to the corresponding period last year.

APL’s average third-quarter 2009 overall headhaul utilisation level was 93%, compared to 90% in 3Q08.
Average revenue per FEU in 3Q09 was 29% lower year-on-year, mainly due to freight rate deterioration across all major trade lanes combined with lower bunker recovery.

Accordingly, 3Q09 revenue for Container Shipping was down year-on-year by 36% at US$1.31 billion.
APL posted a Core EBIT loss of US$140 million for 3Q09.

APL President, Mr Eng Aik Meng, said: “Volumes have been slowly improving since the early part of this year, with greater stability in global trade and the onset of the peak season. Nevertheless, our container shipping earnings continue to be depressed, showing the effect of reduced rates.”

“APL’s average revenue per FEU for the quarter was impacted by new contract pricing in the Transpacific trade which took effect in May and June of this year, marked by lower freight rates and bunker recovery.”

“Active capacity management coupled with improved trade volumes saw a significant improvement in utilisation rates in the third quarter. APL continues to manage its network capacity to optimise utilisation rates and yield,” said Mr Eng.

APL Logistics maintained its positive contribution to the Group’s performance, delivering Core EBIT for 3Q09 of US$17 million, a decline of less than US$1 million.

This was achieved in the face of a year-on-year decline in revenue of 26%, to US$234 million, reflecting the business unit’s continuing discipline in its cost management efforts.

Logistics’ operating costs and general and administrative expenses were reduced by 29% and 11% respectively, resulting in Core EBIT margin improvement from 5.7% in 3Q08 to 7.3% in 3Q09.

APL Logistics President, Mr Jim McAdam, said: “Over this year APL Logistics has experienced significant revenue erosion as our customers’ cargo movements have declined. The difficult business environment makes it more important than ever that we continue to work with customers to design and implement new, more innovative solutions to their supply chain needs.”
The Terminals business segment achieved positive Core EBIT of US$8 million for 3Q09, a year-on-year decrease of 65%. This reflected lower volume throughput, particularly in its US West Coast facilities.
Revenues for Terminals in 3Q09 were US$123 million, 16% lower year-on-year. The impact of lower volumes and revenue was partially offset by cost mitigation initiatives.

OUTLOOK
Despite the cost saving measures that have been implemented and recent improvements in volumes and freight rates in certain trade lanes, NOL anticipates a continuation of adverse business operating conditions. In view of the severity of the downturn in container shipping, the company expects to incur significant losses in the fourth quarter of 2009 and at least through the first half of next year.

3Q09 OPERATING PERFORMANCE (vs 3Q08)
Container Shipping
• Revenue US$1.31 billion, down 36%
• Core EBIT loss of US$140 million
• EBIT loss of US$143 million
• Average revenue per FEU was 29% lower at US$2,219
• Volumes down 6% to 586,000 FEUs
• Headhaul utilisation averaged 93%
Logistics
• Revenue US$234 million, down 26%
• Core EBIT US$17 million, down 6%
• Core EBIT Margin increased to 7.3%
Terminals
• Revenue US$123 million, down 16%
• Core EBIT of US$8 million, down 65%
• Core EBIT Margin 6.5%, compared to 15.8% previously