NOL Posts Q1 Net Loss of $105 Mln
NOL Group reported a first quarter 2016 net loss after tax of $105 million. Core EBIT (Earnings before Interest, Taxes and Non-Recurring Items) for the period was a loss of $84 million, while core EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) remained positive at $18 million.
“Worsening overcapacity of shipping tonnage in 2015 hit the industry well into first quarter 2016. Freight rates which declined across major trade lanes to historic low are expected to remain weak in the face of slower demand growth,” said NOL Group President and CEO Ng Yat Chung. “The difficult market condition is prompting consolidation and changes in alliances in the industry. While APL continues to make progress in taking out costs and improving yield, the proposed acquisition of APL by CMA CGM will help APL achieve scale to stay competitive in the industry.”
Against a backdrop of weak global demand and excess capacity in the industry, APL’s first quarter year-on-year volume fell 6 percent due mainly to weak backhaul volume, while average freight rates fell 23 percent during the same period. As a result, APL’s Q1 revenue contracted 29 percent from the year before to $1.14 billion.
APL maintained prudent management of its deployed capacity, keeping its headhaul asset utilization rate above 90 percent, NOL said, adding that APL also stayed focused on its rigorous cost management and yield-focused trade strategy that emphasized network rationalization and better cargo selection.
In the first quarter, APL achieved cost savings of $60 million. Coupled with savings through a lower bunker price, APL’s total cost of sales per forty-foot-equivalent unit (FEU) reduced by 16 percent year-on-year.
