NOL 1Q Profit Up 183%

Wednesday, May 14, 2008

Neptune Orient Lines (NOL) reported a net profit for the first quarter of 2008 (1Q08) of $121 million, a rise of 183% over the same period of 2007 (1Q07). 1Q08 EBIT was $137 million, up 114% on the prior year. Revenue rose year-on-year by 27% to $2.41 billion.

“Our increased revenue clearly shows our Group is well positioned in a growth industry. 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,” said Dr. Thomas Held, NOL Group President and CEO.

First quarter revenue from the APL Container Shipping business rose by 33% from 1Q07 to more than $2 billion. 1Q08 EBIT of $108 million was 286% better than 1Q07. The EBIT Margin in 1Q08 of 5.3% was up from 1.8% in the same period last year.

Globally, APL carried a total of 662,900 FEU (forty-foot equivalent unit) in 1Q08, up 14% from the same period of last year. There was an 8% industry-wide contraction of U.S. West Coast volumes in the first quarter, while APL recorded a 2% fall. Overall, APL’s Transpacific volumes grew by 16% in 1Q08. This growth was due to increased backhaul volumes and to US East Coast cargoes rising as a proportion of total Transpacific liftings. Moreover, Intra-Asia continued to drive volumes with growth of 12% in 1Q08.

In the Terminals business activities, 1Q08 revenues were down 6% to $145 million compared to 1Q07. EBIT was $12 million, compared with $21 million in the same period of 2007.

Dr Held said: “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. 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.”

1Q08 revenue from the Group’s Logistics activities rose 12% to US$363 million, while EBIT of US$17 million was up 42% from the same period last year.

“We continue to make good progress in Logistics by focusing on our service strengths. In the first quarter, we improved ocean forwarding and land transport volumes.  Additionally, cost management efforts in Contract Logistics pushed our yields up,” said Dr Held.

APL Logistics’ EBIT margin of 4.7% already places it among the more profitable logistics service providers, and over time the Group aims to increase Logistics’ contribution to its bottom line.

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