SINGAPORE (Dow Jones)–Singapore’s Neptune Orient Lines Ltd. (N03.SG) on Wednesday reported a fourth consecutive quarter of losses and said it is trying to cut costs and raise rates, as continued pressure on freight rates and rising fuel costs hurt its bottomline.
The container shipper reported a fourth quarter net loss of US$320 million, compared with a net profit of US$177 million a year earlier. The result was worse than the US$148.7 million net loss forecast in a Dow Jones Newswires poll of seven analysts.
“We are urgently addressing costs and all other factors under our control to improve our performance,” Ng Yat Chung, chief executive, said in a statement to the Singapore Exchange.
The company has set a US$500 million cost savings goal to improve financial performance and competitiveness in 2012, it said.
Revenue was US$2.40 billion, down 13% from US$2.77 billion last year, the company, which is 66%-owned by Singapore state-owned investment company Temasek Holdings Pte. Ltd., said in the statement.
“Recent freight rates show signs of improvement. However the global economy remains uncertain. The container shipping industry continues to face high fuel costs and overcapacity. If these conditions continue, financial performance will remain weak,” NOL said.
For 2011, the container shipper reported a net loss of US$478 million, compared with a net profit of US$461 million in 2010. Revenue decreased 2% to US$9.2 billion.
The average revenue per forty-foot equivalent unit container fell 15% in the fourth quarter to US$2,342 and volumes declined slightly to 824,000 FEUs from 829,000 FEUs, it said. For the full year, however, volume rose 5%.
As part of the global container shipping industry’s drive to restore freight rates to more sustainable levels, NOL is proposing a rate increase of US$750 per twenty foot equivalent unit, effective March 1. The move follows news that global container market leader, A.P. Moller-Maersk A/S (MAERSK-B.KO)’s Maersk Line, is proposing a similar rate increase.
“Customers understand that current rate levels are not sustainable. We expect the rate increase to go through…it appears the trade is prepared to accept the rate increase,” said Kenneth Glenn, President of APL, NOL’s main liner business and the world’s sixth largest container carrier by volume.
APL reported a US$318 million loss before interest and taxes in the fourth quarter compared with earnings before interest and taxes of US$182 million in the same quarter last year.
The company’s logistics business, which accounts for about 15% of the group’s business, reported earnings before interest and taxes at US$67 million in 2011, a growth of 5% over the previous year. The company will seek opportunities to expand its logistics business and is open to possible mergers and acquisitions, Ng said. He added that he hoped to increase contributions from the segment to around 30%.
-By Matthew Allen and Gaurav Raghuvanshi, Dow Jones Newswires
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