NOL Loss Hits $741 Million

Neptune Orient Lines reported losses on Thursday for the fourth quarter and full year 2009 as revenue and freight rates plunged for most of the year before volumes and vessel-utilization started ticking up toward year-end.

The Singapore-based shipping, terminal and logistics group lost $211 million in the fourth quarter of 2009, compared to a loss of $149 million for the fourth quarter of 2008 as its revenue dropped 12 percent to $2.01 billion from $2.29 billion in the year-earlier quarter.

For the full year, NOL posted a loss of $741 million, compared with a net profit of $83 million in 2008. Revenue for 2009 was down year-on-year by 30 percent to $6.5 billion.

The group’s core earnings before interest and taxes in the fourth quarter was a loss of $83 million, compared with a core EBIT loss of $45 million for the corresponding period in 2008.

At the core EBIT level NOL posted a loss of $651 million for 2009, compared to a profit of $213 million for 2008.

“The 2009 results were disappointing and show the impact of sharp falls in demand and freight rates, especially in the first half of the year. This is evident from the dramatic reduction in annual revenue,” said NOL Group President and Chief Executive Officer Ron Widdows.

He said some aspects of the business started to improve in the fourth quarter. “Through the later part of 2009, improved volumes and active capacity management led to higher utilization rates, but earnings remained depressed due to low freight rates, which continued below levels which enable full cost recovery,” he said.

Widdows said NOL may be unprofitable in the first half because of concerns about the sustainability of a pick-up in demand.

Losses in the period are “quite likely,” Widdows told reporters in Singapore, according to Bloomberg News.

Overall volumes carried by NOL’s container line, APL, In the fourth quarter, increased by 28 percent to 733,000 40-foot units from the year-earlier quarter, with the improvement due to higher volumes lifted in all major trade lanes.

Full-year volume declined year-on-year by 7 percent to 2.3 million FEUs. Some shifts in the volume mix occurred, with the Asia-Middle East segment contributing 39 percent of total volume over the course of the year, compared to 35 percent in 2008.

Average revenue per FEU decreased by 25 per cent and 28 percent for 2009 and the fourth quarter respectively, due to lower core freight rates and lower bunker fuel cost recovery as well as changes in trade mix.