On 30 July Singapore’s Neptune Orient Lines reported net profits of USD890 million for 2Q15, reversing a USD54 million loss for 2Q14.
The earnings were largely due to the USD887 million gain from selling APL Logistics on 29 May. The supply chain management arm was sold to Japan’s Kintetsu World Express for USD1.238 billion.
Despite freight rates continuing to drop in the face of chronic overcapacity, NOL, the parent of APL, managed to return to the black through cost management.
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The company claimed it had USD100 million in 2Q15 and CEO Ng Yat Chung claimed there is room for further cost savings with charters for another nine ships scheduled for expiry in 2H15.
APL’s revenue fell 22% year-on-year to USD1.3 billion for 2Q15, as its average freight rates dipped 17% year-on-year.
Its cargo volumes also fell 12% y/y in 2Q15 as economic growth slowed and overcapacity persisted.
Ng said, “The group’s container shipping business continued to face a challenging environment characterised by over-capacity and weak market demand. Nonetheless, APL reversed a core EBIT (earnings before interest and tax) loss in the second quarter last year to a positive position this year.
“We remain focused on improving our cost competitiveness, yield optimisation and service reliability to return the liner business to sustained profitability.”