NOL First Half Net Profit Up 45% to US$196 Million

Global container shipping, terminals and logistics group Neptune Orient Lines (NOL) reported on 7th August a net profit for the first half of 2008 (1H08) of US$196 million, a rise of 45% over the same period of 2007 (1H07).

1H08 EBIT was US$229 million, 30% higher than 1H07.

For the second quarter of 2008 (2Q08), a period marked by deteriorating market conditions and significant cost pressures, the company reported a net profit of US$76 million (19% lower than 2Q07) and EBIT of US$92 million (down 18% on 2Q07).

Revenues for 1H08 were up 25% to a record US$4.64 billion. 2Q08 revenues rose by 24% to US$2.24 billion over the same period of 2007.

NOL core Container Shipping business, APL, saw revenues rise 32% to US$3.94 billion for 1H08, and 31% for 2Q08, at US$1.92 billion. 2Q08 average revenue per FEU of US$3,014 was 14% higher than for 2Q07. This largely reflected higher bunker adjustment factor (BAF) collections.

APL carried record volumes of 1.27 million FEU (forty-foot equivalent unit) in 1H08. This was 13% more than in 1H07, with volume increases in most major trade lanes.

The Container Shipping unit reported EBIT for 1H08 of US$168 million, up 60% on 1H07. 2Q08 EBIT of US$60 million was 22% lower than for 2Q07.

NOL Group President and Chief Executive Officer, Mr Ron Widdows said: The combination of continuing growth in container volumes, and effective yield management enabled APL to deliver an improved earnings performance for the half year, although there was a decline in the results for the second quarter.

Costs, particularly for fuel, have continued to escalate.?The APL Logistics unit recorded a 9% improvement in 1H08 revenues to US$681 million, with 2Q08 up 6% at US$318 million.

Logistics?EBIT grew by 15% year-on-year to US$30 million, as a result of improved margins and effective cost management. For 2Q08, EBIT was US$13 million compared to US$14 million in 2Q07.

Deteriorating market conditions and high bunker prices will result in a significantly more challenging operating environment for container shipping lines in the second half of this year compared to the first half.

In the period ahead, NOL will maintain focus on keeping its asset base tight, while continuing to manage costs and productivity.

Even as it sharpens its focus on improving efficiency, the Group will continue to invest in new capabilities that will have a positive impact on service delivery globally, with the aim of continuing to perform at the top of the container shipping sector.