NOL reduces losses by cutting costs

NOL reduces losses by cutting costs
NOL's CEO said the fourth quarter was particularly difficult

Neptune Orient Lines (NOL) has continued to make a loss in 2015, although losses were reduced due to cost cuts.

NOL is the parent company of American President Lines (APL) and is currently in the process of being acquired by CMA CGM.

Excluding gains from the US$888m sales of its logistics unit, NOL made a full-year net loss of US$181m. Despite a challenging year for container shipping in general,  this is an improvement of 30% on NOL’s 2014 losses.

In the fourth quarter, the group made a net loss of US$77m, an improvement on the previous year’s fourth quarter loss of US$85m. This was despite APL’s revenue decreasing by 29% as average freight rates fell by 22% and volumes fell by 12%.

NOL CEO Ng Yat Chung said: “The last quarter of 2015 was particularly difficult. Container freight rates hit historical lows across major trade lanes as new vessel capacity came on stream amid softening market demand. Nonetheless, APL continued to reap cost savings and yield improvements.”

He continued to say that, on a full year basis, its falling total costs of sales per forty-foot-equivalent unit (FEU) continued to offset the decline in freight rates.

In a statement, the company claimed APL’s costs had been cut by US$435m in 2015 due to a “yield-focused trade strategy that emphasised network rationalisation and better cargo selection”.

This was the fourth year in a row that APL has reduced its losses.

On December 7, 2015, CMA CGM offered to acquire NOL for SGD1.30 per NOL share. The making of the offer is subject to regulatory approval in the EU, China and USA, which NOL expects to receive by mid-2016.