Neptune Orient Lines (NOL) posted a sixth straight quarterly loss, dragged down by one-off expenses linked to impairment losses and restructuring charges.
Excluding these charges, NOL registered a turnaround for its core earnings before interest and taxes (Ebit) in the second quarter over the year on higher freight rates and cost savings, but it simply said that market conditions remain uncertain, reported Business Times Singapore.
Net loss for the three months ended June 29 stood at US$118 million, which widened from a net loss of $57 million for the same period a year ago.
NOL booked one-time charges that totalled $112 million, comprising an approximate $82 million impairment loss for five obsolete vessels and another $29 million in restructuring charges linked to layoffs.
The sale of the obsolete vessels is part of NOL's strategy to divest non-performing assets, said CEO Ng Yat Chung.
Asked if more writedowns are on the cards, Ng said NOL has no immediate plans, but will "maintain the flexibility" to do so, if market conditions deteriorate.
"The group's financial performance will depend on freight rates, global economic position, overcapacity in container shipping and fuel prices," Ng said."The outlook for these factors remains uncertain."
Revenue for the second quarter rose eight percent to $2.33 billion, thanks to higher contributions from both its logistics and liner arms.
Its logistics arm posted a quarterly revenue of $361 million, up 15 per cent over the year, due in part to the firmer contributions from the contract logistics division on the back of strong demand in the rail and land transport business segment.
NOL's liner division, APL, posted a seven percent increase in its revenue to $1.99 billion, backed by stronger freight rates and higher volumes transported. Volume rose by four percent over the year to 0.7 million FEUs, mainly due to increase in volume across most trades.
And average revenue per FEU increased by three percent from a year ago to $2,615, due to higher freight rates in the intra-Asia and Asia-Europe trade.
While volumes were in line with expectations, it is clear that NOL is not seeing the same demand out of Europe and North America that it had seen in years past, said Kenneth Glenn, president of APL.
APL's core Ebit - which excludes the one-off charges -turned the corner in the quarter at $7 million, compared to a loss of $53 million a year ago.
Together, the group's core Ebit - stripping out non-recurring expenses - stood at $16 million, reversing from a loss of $41 million. This is the first time it hit a core Ebit since the first quarter of 2011, NOL said.
( Source: CargoNews Asia )
