Neptune Orient Lines Ltd. (NOL) expects a better second half and overall profit in the current year. NOL said the bottoming out of the Asian economic crisis had resulted in higher cargo volumes in most sectors. Freight rates out of Asia to Europe and North America had also increased since mid-year, it said in comments accompanying its result.
NOL reported last Wednesday an interim net profit, the first time in two years, but results were disappointing as gains came mostly from non-recurring items. The national shipping giant reported a net profit of S$10.02 million for the six months ended June 30, 1999 against a net loss of S$240.76 million a year earlier.
As expected, NOL reaped a net profit of S$285 million from the sale of its non-core North American stacktrain business unit, APL Land Transport Services Inc. in May.
Container shipping operations accounted for 72 percent, chartering six percent, logistics eight percent and other investments, namely its stacktrain unit which it sold, 14 percent, NOL's director of corporate finance Cedric Foo said. Foo said the core container transportation activity achieved a 16 percent rise in liftings but overall container freight rates were flat for first half 1999.
"The financial turnaround has began but I am not satisfied because afterall, we are talking about a net loss before non-recurring items," Flemming Jacobs, NOL's chief executive officer said.
With the worst of Asia's crisis over, NOL expected to see a better second half and "record an overall profit for 1999."
While rates for Asia inbound containers have weakened, rates for NOL's two major trade routes were expected to firm. Asia to North America saw rates firm by $500 per teu from May while Asia to Europe rose by $75 per teu from April.
The group was also affected by a 25 percent drop in Aframax tanker charter rates
for the interim, but Foo said these were stabilizing as of August.