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NOL’s Weak 3Q13 Earnings -31/10/13
NOL Posts Weak 3Q13 Earnings
Neptune Orient Lines (NOL) reported a 60 percent decrease in net profit for 3Q13 from US$50 million to US$20 million, compared to the same quarter last year. Revenue was also down 10.4 percent to US$2.1 billion from US$2.3 billion for the current quarter ended 20 September 2013. Subsequently, 3Q13’s earnings per share slumped to 0.77 US cents from 1.94 US cents on a year-on-year basis. Weaker earnings were mainly attributed to a sharp decline in freight rates from the oversupply conditions of the industry, where total container volumes of its container shipping business, American President Lines, were reduced by 5 percent from the previous year. In addition, average revenue per forty-foot equivalent unit also decreased 9 percent to US$2,372 between 3Q13 and 3Q12. Despite the weak overall performance, NOL’s logistics business registered a 1.6 percent increase in revenue to US$371 million compared to the same quarter last year.
Significance: As a result of adverse market conditions in 3Q13, NOL was unable to lift its earnings during this peak season. The company does not foresee freight rates and the oversupply conditions to improve anytime soon. Corresponding to this, NOL is also taking actions to restructure its capacity and service networks to align better with lower demand present in the current market.
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