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NOL's Q4 loss narrows to US$75m

For the full year, the carrier returns to the black with a net profit of US$707m on the sale of its logistics unit
Wednesday, February 24, 2016 - 05:50

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Freight rates hit historical lows in Q4 on supply pressure from a large number of newbuild vessels joining the global fleet and weakness in demand across many trade lanes from a lacklustre global economy, China's softening growth and ultra-low bunker prices.
NOL

Singapore

NEPTUNE Orient Lines has posted a net attributable loss of US$75.45 million for the fourth quarter, down a tad from the US$85.07 million loss for the same period a year earlier.

The loss for the three months ended Dec 25, 2015 includes US$1.82 million in profit from discontinued logistics operations under APL, which was swamped by a US$77.27 million loss from continuing operations.

Revenue for the quarter came to US$1.28 billion, down 28 per cent from US$1.79 billion.

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Loss per share from continuing operations slowed to 2.98 US cents, from 4.73 cents a year ago.

Earnings per share from discontinued operations came to 0.07 cent, down from 1.44 cents.

For the full year, NOL swung into the black with a net profit of US$707.2 million, against a loss of US$259.84 million previously.

Excluding discontinued operations, full-year loss from continuing operations fell to US$220.44 million, from US$374.35 million previously.

Revenue for FY15 fell 23 per cent to US$5.38 billion, from US$7.03 billion a year ago.

Loss per share for FY15 from continuing operations came to 8.5 cents, down from 14.47 cents previously. Earnings per share for FY15 from discontinued operations rose to 35.77 cents from 4.42 cents a year ago.

Net asset value per share as at Dec 25 rose to 95 cents from 67 cents as at Dec 26, 2014.

Despite turning in another full-year loss from continuing operations, NOL chief executive Ng Yat Chung noted that Singapore's flagship container shipping company had narrowed its Q4 net loss by US$8 million over the previous year, and that its full-year net loss of US$181 million was an improvement of US$79 million over FY14.

Full-year core Ebit (earnings before interest, tax and non-recurring items) loss has also narrowed for the fourth straight year, improving by 5 per cent year on year to US$72 million.

Mr Ng pointed to a loss reduction from a steeper decline in unit cost over unit revenue. Cost savings for FY15 reached US$435 million, including US$100 million for Q4.

But freight rates hit historical lows in Q4 on supply pressure from a large number of newbuild vessels joining the global fleet and weakness in demand across many trade lanes from a lacklustre global economy, China's softening growth and ultra-low bunker prices.

Against industry headwinds, NOL achieved a headhaul utilisation of 90 per cent for its liner business in Q4.

With freight rates expected to remain under pressure, NOL will continue to focus on cost and operational efficiencies as well as yield and network capacity management, Mr Ng said.

NOL is in the midst of being acquired by CMA CGM under a S$3.4 billion deal, which pegged shares in NOL at S$1.30 apiece.

The completion of the acquisition by CMA CGM is subject to antitrust clearances in Europe, the US and China, the process of which has "not encountered any difficulty" so far, according to Mr Ng.

He said that the S$3.4 billion acquisition was still expected to be approved by the relevant regulatory bodies by mid-2016, when CMA CGM is due to make a formal voluntary general conditional offer for the remaining shares in NOL and subsequently delist its acquisition target.

Shares in NOL closed at S$1.25 on Tuesday, up half a cent.

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