NOL reports net profit of US$890 million in 2Q

Net profit of NOL Group in the second quarter of 2015 reached US$890 million. Excluding the US$887 million gain on the sale of its supply chain management business, NOL achieved a net profit of US$3 million in the second quarter of 2015, compared to a net loss of US$54 million in 2Q 2014, NOL said in a press release.

Singapore-based NOL said that the second quarter of 2015 saw severe freight rate erosion with rates in major trade lanes falling to some of the lowest levels seen in recent years.

Despite the tough operating environment, the Group posted a second quarter 2015 Core EBIT (Earnings Before Interest, Taxes and Non-Recurring Items) of US$29 million, versus a loss of US$15 million in the same quarter last year. NOL's Core EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) in 2Q 2015 was US$119 million, up 53% from US$78 million in the same period last year.

NOL reported US$100 million in cost savings in 2Q 2015, bringing its total cost savings for the first half of the year to US$255 million. "There is room for further cost savings with another nine vessels scheduled for expiry in the second half of this year,"added Mr. Ng.

Following the completion of the sale of APL Logistics on May 29, 2015 for a final purchase price of US$1.238 billion, and after taking into account transaction and transaction-related expenses, the NOL Group registered a gain of US$887 million. The Group saw a healthier balance sheet after repayment of debt, with the group's net gearing ratio reduced to 1.03x as of June 26, 2015 from 2.25x as of December 26, 2014.

APL, NOL's container shipping business, recorded a 12% volume reduction in 2Q 2015 compared to the same period last year, due both to weak global demand as well as the carrier's continued efforts to trim capacity in unprofitable trade lanes to optimize yield.

Its average freight rates dipped 17% amidst pressure from over-capacity in the industry. Versus the same period last year, APL's revenue fell 22% to US$1.3 billion in the second quarter of 2015.

In spite of reduced revenue, APL achieved an improved 2Q 2015 Core EBIT of US$20 million, compared to a loss of US$28 million over the same period last year.

This is its sixth consecutive year-on-year improvement in its quarterly Core EBIT. APL attributed its performance to stringent cost management as well as a yield-focused trade strategy that emphasizes network rationalization and better cargo selection. 

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