Singapore’s Neptune Orient Lines, in the spotlight for its possible For Sale tag, managed to return to the black in the second quarter largely thanks to the sale of APL Logistics to Kinetsu World Express.
NOL reported an $890m net profit for the period, a strong reverse from the $54m loss it made in the same period last year. However, the sale of its logistics division accounted for $887m of the profit, meaning its actual profit from its business operations, led by boxline APL, stood at just $3m.
NOL, which the Wall Street Journal has reported recently has been put up for sale by majority shareholder Temasek Holdings, said that the second quarter of 2015 saw severe freight rate erosion with rates in major trade lanes falling to some of the lowest levels seen in recent years.
“The group’s container shipping business continued to face a challenging environment characterised by overcapacity and weak market demand. Nonetheless, APL reversed a core EBIT loss in the second quarter last year to a positive position this year,” said NOL group president and CEO Ng Yat Chung.
“We remain focused on improving our cost competitiveness, yield optimisation and service reliability to return the liner business to sustained profitability.”
NOL, one of the poorest financial performers amongst the world’s leading containerlines in recent years, reported $100m in cost savings in the second quarter, bringing its total cost savings for the first half of the year to $255m. “There is room for further cost savings with another nine vessels scheduled for expiry in the second half of this year,” added Ng.
APL, NOL’s container shipping business, recorded a 12% volume reduction in the second quarter compared to the same period last year, due both to weak global demand as well as the carrier’s continued efforts to trim capacity in unprofitable tradelanes to optimise yield.
Its average freight rates dipped 17% amidst pressure from overcapacity in the industry. Versus the same period last year, APL’s revenue fell 22% to $1.3bn.