NOL Group, parent of container ship operator APL, lost $10 million in the quarter ending March 31, as rising fuel prices and lower-than-expected demand ate up the strong revenue growth.
The Singapore-based container shipping line said outlook for the container-shipping market remains “uncertain” because of increased operating costs — particularly related to fuel cost increases -- and competitive pressure on rates that it expects to continue for the near term.
By the Numbers:
Europe-North America Westbound Container Trade.
“Should these conditions persist, our results will be negatively impacted,” it said in Friday’s announcement of first quarter results. “Our focus remains on operating efficiency, cost reduction and high vessel utilization.”
NOL’s first-quarter loss was markedly lower than the $98 million loss it recorded in the same period last year, while first quarter revenue increased 16 percent year-over-year in to $2.4 billion, from $2.1 billion a year ago. First-quarter operating profit was $13 million, compared to an operating loss of $74 million in the same period last year.
“In spite of year-over-year volume growth, a softer than expected Lunar New Year period and rising fuel costs have interrupted our momentum,” said Ronald D. Widdows,
NOL Group President and CEO.
APL, the world’s seventh-largest container shipping line, posted an operating loss of $8 million, down from the $89 million loss it recorded in the first quarter of 2010. Its first quarter revenue was $2.1 billion, up 15 percent from a year earlier.
APL’s container volume increased 9 percent in the first quarter year-over-year. Average revenue per 40-foot equivalent unit increased 3 percent. Vessel utilization in the first quarter was 92 percent.
“We lifted higher container volumes in the Asia-Europe and Intra-Asia trade lanes during the first quarter, and freight rates improved in the Trans-Pacific,” said APL President Eng Aik Meng. “But our emphasis must remain on operating efficiency, as well as slow-steaming our ships to conserve fuel and counteract the effect of rising fuel prices, which were 28 percent higher per metric ton in the first quarter of 2011 than they were in 2010.”
APL Logistics, NOL’s supply chain management business, reported first quarter revenue of $368 million, up 24 percent from a year ago. Its operating profit increased 40 percent in the quarter to $21 million and the operating profit margin was 5.7 percent, compared to 5.1 percent in the first quarter last year.
The improvements were attributed to higher volumes and recovering unit rates across Logistics’ various businesses. Contract Logistics revenue increased 23 percent in the first quarter and International Services revenue was up 26 percent.
“Our commercial performance continues to gain strength across multiple services which have been improving since the middle of last year,” said APL Logistics President Jim McAdam. “We’ve maintained a disciplined focus on cost of operations and are witnessing consistent growth in emerging markets— both in our international logistics business as well as in the contract logistics-automotive segments.”