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Media
Neptune Orient Lines, parent company of container carrier APL, said it had a fourth quarter loss of $149 million compared to net profit of $196 million in the same 2007 period.
Revenue in the quarter was $2.29 billion, 6 percent less than the $2.42 billion in the same 2007 period.
NOL said the loss reflects severe deterioration in market conditions and restructuring costs totaling $72 million.
In November NOL said it was reducing staff by 1,000 positions with the greatest number being in North America, where it said its cost base was highest. The company also decided to move its headquarters from Oakland, Calif., to Phoenix, Ariz.
For the full year, NOL reported a net profit of $83 million, 84 percent lower than the $523 million it earned in 2007. Revenue for 2008 was $9.29 billion, up 14 percent from the $8.16 billion in 2007.
NOL said it expected the downturn in container shipping and related businesses to extend through 2009 and that it would report a loss this year.
2008 was a year of dramatic change, in which our group faced some of the most turbulent conditions in its long history, said Cheng Wai Keung, NOL chairman. The impact of the difficult macroeconomic environment is reflected in the fourth quarter operating results. The results we are announcing today show the impact of a severe market downturn in the latter part of 2008, caused by reduced consumer confidence in the wake of the global economic crisis, said Ron Widdows, NOL president and chief executive officer. The severity of the collapse in global trade over recent months is without precedent. Since late September 2008, we have seen a consistent, week-by-week drop in shipment levels across nearly all trade routes.
Though we recognized early the pattern of decline in market conditions, and took decisive action to reconfigure our business, the adjustments could not fully counter the speed and dramatic nature of the downturn being experienced in global container trades, Widdows said.
APL recorded a 5 percent year-on-year rise in annual volumes to 2.47 million FEUs (40-foot equivalent units). It said it had strong growth in volumes in the intra-Asia trade. This, combined with enhanced bunker recoveries, saw APL achieve revenues for the year of $7.95 billion, 19 percent higher than in 2007. But it said "rapid deterioration in demand across all trades" resulted in fourth quarter revenue of $1.96 billion, down 2 percent.
APL’s core earnings before interest and taxes (EBIT) was $73 million in 2008 compared to $428 the prior year, and the segment had a core (EBIT) loss in the fourth quarter of $84 million.
In container shipping, average revenue per FEU in the fourth quarter was 7 percent higher year-on-year. The company said the additional revenue was derived primarily from transpacific trade as a result of the company's success earlier in the year in implementing floating bunker fuel surcharges on a majority of transpacific customer contracts, which were not included in the fourth quarter of 2007.
Eng said APL in response to market conditions shaved capacity and reconfigured services in the fourth quarter, reducing capacity 25 percent in the Asia/Europe trade, 20 percent in the transpacific and 16 percent in the intra-Asia trade.
The company said its APL Logistics unit had core EBIT of $64 million in 2008, up 5 percent from 2007, and $16 million in the fourth quarter, 24 percent lower than in the fourth quarter of 2007.
During the final quarter the global economic slowdown severely impacted the supply chains of the multinational corporations, which form the backbone of APL Logistics' customer base, and the results of the logistics segment came under pressure, especially in the automotive and forwarding segments, said Brian Lutt, president of APL Logistics.
The company said its terminals business segment reported full year core EBIT of $72 million in 2008, down 23 percent from 2007, and $18 million in the fourth quarter, down 33 percent from the fourth quarter of 2007 as liner shipping customers reduced capacity.
Source: American Shipper
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