NOL Reports $50 Million Profit
Increased operational efficiency, better market conditions boost Group’s performance.
NOL Group reported net earnings of $50 million for the third quarter of 2012, a $141 million turnaround from the $91 million net loss in the third quarter of 2011. It was the first time since the fourth quarter of 2010 that the global container shipping and logistics group posted a net profit.
Singapore-based NOL 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 (Earnings Before Interest and Taxes) of US$19 million.
“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 has achieved $360 million through its cost and efficiency drive in the first three quarters of 2012 toward a full-year goal of $500 million.
The Group’s Core EBIT for the third quarter was $74 million compared to a Core EBIT loss of $72 million in the same quarter a year ago .
YTD12 YTD11 Change % 3Q12 3Q11 Change %
Revenue (US$m) 7,013 6,808 3 2,302 2,213 4
Core EBIT (US$m) (143) (100) 43 74 (72) n.m.
Net (loss)/profit (US$m) (321)< /p> (158) 104 50 (91) n.m.
NOL’s liner shipping business – APL – reported a Core EBIT profit of $55 million in the third quarter, compared to a loss of $88 million in the same period a year ago. APL achieved revenue of $6 billion for the three quarters in 2012, a year-on-year increase of 2%, on the back of a 3% 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 modernization program, 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 $365 million, up 10% from a year ago. Contract Logistics achieved year-to-date revenue of $740 million, a 16% increase, due mainly to strong demand for rail and land-based logistics services. International Logistics Services revenue improved 1% amidst a soft retail and apparel environment. APL Logistics reported third quarter Core EBIT of $19 million, up 19% 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 the Group will continue to extract further operational efficiencies and strengthen its competitive position, it expects to post a full year loss.