SINGAPORE–Container shipper Neptune Orient Lines Ltd. (NO3.SG) Thursday said it swung to a net profit in the third quarter mainly because of cost savings and improved performance from its liner and logistics business.
NOL, which is about 66% owned by Singapore state investment company Temasek Holdings, posted a net profit of US$50 million in the quarter ended Sept. 21 compared to a US$91 million loss in the same period last year.
It is NOL’s first net profit since the fourth quarter of 2010.
NOL warned that with macro economic conditions remaining weak and the industry facing excess capacity and high fuel prices, it expects to post a full year loss.
Like many shippers, NOL has been hurt by slowing world-wide demand and rising fuel prices. The company has taken cost-cutting measures in recent years, including reducing its fleet and bunker-fuel consumption. In second-quarter results the company said it achieved US$225 million in cost reductions. Its full-year goal is US$550 million.
“These efficiency gains, coupled with our fleet modernization program are the reasons our unit costs have improved significantly,” APL president Kenneth Glenn said in a statement.
APL is the liner shipping business of NOL and it accounts for more than 85% of the group’s revenue.
NOL’s revenue for the third quarter rose 4% on year to US$2.3 billion from US$2.2 billion. Revenue from its liner-shipping business rose 3% to US$1.96 billion compared with US$1.90 billion while logistics saw revenue growth of 10% to US$365 million from US$333 million.
The liner group’s revenue rose mainly because of higher volumes across most trades and higher freight rates, NOL said. Logistics saw strong demand in the rail and land-transport segment.
“While the group will continue to extract further operational efficiencies and strengthen its competitive position, it expects to post a full-year loss,” NOL said in the statement.
Separately, the company said it has sold its Singapore headquarters building for S$380 million (US$311 million) to a property developer Fragrance Group Ltd. (F31.SG).
– P.R. Venkat, (c) 2012 Dow Jones & Company