NOL posts net earnings gain

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NOL posts net earnings gain

Increased operational efficiencies and improved market conditions have contributed to US$141m turnaround for shipping and logistics provider, NOL

NOL posts net earnings gain

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NOL Group has posted net earnings of US$50m for the third quarter of 2012, a US$141m turnaround from the US$91m net loss in the third quarter of 2011. 

It is the first time since the fourth quarter of 2010 that the global container shipping and logistics group posted a net profit.

In a media release the Singapore-based company attributed the improvement in financial performance to increased cost efficiencies, stable rates and volume growth.

APL Logistics, NOL’s supply chain management business, reported double digit revenue growth, with a third quarter Core EBIT of US$19m.

“Our efforts to improve the group’s competitive position are paying off,” said NOL Group CEO Ng Yat Chung. “Going forward, maintaining focus on the fundamentals of our business – service quality, operational efficiency and cost discipline – will be key to improving performance.”

The company said that it had achieved US$360m through its cost and efficiency drive in the first three quarters of 2012 toward a full-year goal of US$500m.

The Group’s Core EBIT for the third quarter was US$74m compared to a Core EBIT loss of US$72 million in the same quarter a year ago.

NOL’s liner shipping business – APL – reported a Core EBIT profit of US$55m in the third quarter, compared to a loss of US$88m in the same period a year ago. APL achieved revenue of US$6b for the three quarters in 2012, a year-on-year increase of 2 per cent, on the back of a 3 per cent rise in volumes transported. 

The company said it continued to benefit from efficiency gains in its operational network. “We were able to move more with a smaller fleet capacity, and reduced bunker fuel consumption,” said APL president Kenneth Glenn. “These efficiency gains, coupled with our fleet modernisation programme, are the reasons our unit costs have improved significantly. We believe these initiatives position us well into the future.”

NOL’s supply chain management business, APL Logistics, reported third quarter revenue of US$365m, up 10 per cent from a year ago. Contract Logistics achieved year-to-date revenue of US$740m, a 16 per cent increase, due mainly to strong demand for rail and land-based logistics services. 

International Logistics Services revenue improved 1 per cent amidst a soft retail and apparel environment. APL Logistics reported third quarter Core EBIT of US$19m, up 19 per cent from the last quarter a year ago.

“Even as our logistics business continues to grow organically, we are also expanding our market footprint through strategic investments,” said APL Logistics president Jim McAdam. “Our acquisition of the APLL-Zhiqin Group will significantly increase APL Logistics’ domestic footprint in China. Our service network will expand to nearly 80 offices and hub facilities nation-wide. With an extensive network of trucking and distribution services, we are better able to serve international customers seeking to penetrate China’s fast-growing consumption markets.”

The Group turned in an improved third quarter result due mainly to cost savings and improved business efficiencies. However, the macro-economic outlook remains weak and the container shipping industry continues to face overcapacity and high fuel prices.

The group posted weak first quarter results. While it will continue to extract further operational efficiencies and strengthen its competitive position, it expects to post a full year loss.

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