The tough economic situation and business environment has not prevented Neptune Orient Line from first half profits, as the company announced $11 million profits (albeit down 78 percent from 1H 2000 profits) on revenues of $2.3 billion (up 6 percent from 1H 2000 revenues.)
In summarizing his company's results, Flemming R. Jacobs, NOL Group president and CEO, said
"We have achieved much. We came from a difficult past and we are on the right track to return to full health, but we are not there yet. We would have preferred a little more time to consolidate all we have achieved and are achieving before having to deal with a severe downturn in the economic environment like this one. We will continue our strategy, but it will take us a little longer to reach our goals."
"Today the NOL Group is clearly focused on building its three core businesses: APL, the Liner business; APL Logistics (APLL); and the tanker business, American Eagle Tankers (AET).
Volumes in Europe were up 14 percent and rates up 1 percent, while in Asia/Middle East rates were up three percent. These gains were undermined particularly by a significant reduction in both rates and volumes in trades touching the Americas (rates down 4 percent, volumes down 5 percent). The overall result for the first half of 2001 was a drop in APL Liner revenues of 2 percent to $1.77 billion and a drop in Earnings Before Interest and Tax (EBIT) of 68 percent to $31 million.
"We are in the process of rejuvenating our fleet, and the vast majority of the newbuilds are chartered in, which provides flexibility without taxing the balance sheet. We are dealing with low growth by returning other chartered in vessels to their owners as new vessels that are more cost efficient come on line," Jacobs said.
Chartering revenues increased 24 percent to $180 million in 1H01. EBIT rose 268 percent from $13 million to $48 million. "Our tanker business, American Eagle Tankers (AET), continues to be a bright spot, contributing well to both revenue and the bottom line," said Joseph Kwok, COO, CEO and president of AET and the Chartering Division.
A marked improvement in Aframax crude oil tanker rates of 40 percent, from $22,000 to more than $30,000 per day over the same period in 2000, contributed to the improved result. "We added a further two Aframax tankers through time charter in the first half of this year, taking our fleet to 24," Kwok said. "We are on track to have an entirely double-hulled fleet as planned by 2003." None of the current fleet is single-hulled.
"We disposed of another dry bulk carrier during the first half of this year, leaving four modern Panamax bulk carriers," Kwok said. "Our intention is still to exit this business over time."
Overall, expectations for the Chartering Division for the full year are positive and better than the solid results of 2000.