Group narrows net loss; lifted by $470 million (USD) cost savings and building sale. NOL Group today reported a 2013 net loss of $76 million, improving 82 percent from a $412 million loss the previous year.
The group’s full year financial results were helped by a non-recurring $200 million gain from the completed sale of its headquarter building in Singapore, as well as its continued focus on operational efficiency and cost management, which delivered $470 million worth of cost savings in 2013. Coupled with $504 million saved in 2012, NOL had shed almost $1 billion in costs over the past two years.
“The delivery of new tonnage in 2013 added to the over-capacity in the container shipping industry. Overall freight rates declined through the year, with the fourth quarter recording one of the lowest levels the industry has seen in the last three years,” said NOL Group CEO Ng Yat Chung. “Despite the tough environment, the Group put in a better financial performance. We started the year with an improved cost base which we continued to build on. In particular, our liner business strengthened its operating results, delivering a significant 72-percent improvement in Core EBITDA.”
NOL Group reported positive Core EBITDA of $150 million, a 24-percent year-on-year improvement from 2012. Over the same period, NOL’s revenue dropped 7 percent to $8.8 billion. NOL registered a Core EBIT loss of $167 million, a nine-percent improvement from a year earlier.
APL, NOL’s container shipping business, reported a nine-percent dip in revenue to $7.3 billion, which the company attributed to capacity management and a sharp fall in freight rates. In spite of the lower revenue, APL made a 2013 Core EBIT improvement of eight percent over 2012, registering a loss of $231 million.
“Our revenue was hard hit by a drastic drop in freight rates. We had also experienced one of the weakest third and fourth quarters in recent years,” said APL President Kenneth Glenn. “APL’s improved cost structure will sustain our long-term growth, evidenced by our improving operating results. We are also sharpening our competitive edge through the adoption of a function-led management approach to speed up decision-making and improve market responsiveness.”
In 2013, APL’s headhaul utilization stayed above 90 percent. Its average revenue per 40-foot-equivalent unit (FEU) dropped eight percent, while operational efficiencies and lower bunker prices helped reduce cost of sales per FEU by eight percent. By the end of 2013, APL had taken delivery of 24 out of 34 new vessels. APL expects to reap even greater operational efficiencies with the arrival of the remaining 10 fuel-efficient vessels in 2014, which will replace 20 smaller vessels on expiring charters.
NOL’s supply chain management business, APL Logistics, maintained its steady performance in 2013 despite the weak global economy. It delivered revenue of $1.6 billion, up two percent from 2012. APL Logistics remained profitable, posting a full year Core EBIT of $64 million, four percent down from the previous year. The decline was largely attributed to a lower contribution from its Contract Logistics business.
In 2013, Contract Logistics experienced a slight two-percent drop in revenue to $1 billion, with Core EBIT at $22 million. This was mainly due to an extended automotive plant shutdown in North America in the second and third quarters of 2013, further hampered by a slow sector recovery in the rest of the year. Over the same period, International Logistics Services’ revenue improved 10 percent year-on-year to $585 million, fuelled by business expansion in emerging markets in Asia/Middle East and Latin America. International Logistics Services’ 2013 Core EBIT rose 35 percent year-on-year to $42 million.
Global economic growth prospects are uncertain. Conditions in the liner industry are expected to remain challenging due to continued over-supply of capacity. Liner freight rates will remain under pressure. The Group will continue its focus on managing costs and operational efficiencies with the aim to improve its financial performance in 2014.