Singapore-based NOL Group reported a $254 million first quarter loss despite cost-cutting and rate increases in March, and said high fuel costs and excess capacity will continue to challenge container shipping lines.
The results compared with a net loss of $10 million a year earlier. Revenue fell 3 percent to $2.4 billion.
APL, the group’s shipping unit, reported negative core earnings before interest and taxes of $246 million, compared with an $8 million core EBIT loss a year earlier. Liner revenue fell 4 percent to $2 million.
NOL said its losses came despite about $100 million in cost-cutting in the first quarter. The company said it is on track to achieve $500 million in savings this year, mostly through reduced fuel use and operational efficiencies.
The company said it is restructuring its organization to achieve additional annual savings of about $70 million from 2013 on.
“There were positive signs in the first quarter — the freight rate increases in March and growth in the logistics business,” NOL CEO Ng Yat Chung said. “But we must continue to aggressively manage our operating costs and streamline our organization for greater efficiency.”
APL’s average revenue per 40-foot equivalent unit declined 7 percent, while container volume rose 4 percent. Bunker fuel prices increased to $684 per ton from an average of $523 in the first quarter of 2011, offsetting the impact of a 75,000-ton reduction in fuel consumption.
“Rates have been moving up since March, but not yet enough to offset the high cost of fuel,” APL President Kenneth Glenn said.
APL Logistics’ core EBIT fell 38 percent to $13 million as revenue grew 7 percent to $394 million. Contract logistics revenue grew 15 percent, mostly because of strong demand for rail and land-based services from automotive customers.