Global cargo transportation and logistics company Neptune Orient Lines (NOL) has reported net profit of US$187 million for the first half of 2006, down 52% from the same period of 2005. First half 2006 total Group revenues rose slightly year-on-year to US$3.52 billion, while the Group?s EBIT of US$227 million was down 47% from the corresponding period of 2005.

NOL Chairman Mr Cheng Wai Keung, said: ?After record financial performances in the past three years, we are now in a more challenging business environment, which is reflected in reduced earnings for the first half of 2006.

?Business conditions for both our liner and logistics segments have become more difficult. Freight rates have softened, but our cost management efforts continue, mitigating the cost pressures from high fuel prices.?

Average revenues per FEU for NOL?s liner business, APL, were US$2,650, down 4% compared to the previous year. Container volumes were 5% higher than a year before at 1.01 million FEU. However EBIT for APL was US$194 million, down 52% from the same period in 2005.

APL has increased new vessel commitments to 32 scheduled for delivery over the next four years. Only three of these ships will enter the fleet in 2006. These ships range in size from 3,500 to 8,100 TEU, with 14 of these being in the 6,350-TEU class.

APL Logistics? revenues for the period rose 4% year-on-year to US$636 million. The contract logistics services line of business posted revenue growth of 4% over 2005 and international services revenues were 3% higher year-on-year. The strongest year-on-year revenue growth was posted by the Asia-Middle East region, consistent with the continued shift of sourcing and manufacturing to low cost locations.

Operating profit of US$26 million for the first half was down by 7% on the previous year. Mr Brian Lutt, President of APL Logistics, said: ?We experienced more challenging business conditions in the contract logistics segment, with lower utilisation levels at multi-user warehouse facilities and as a result of our continuing focus on re-aligning this business segment with our international conveyance strategy. Our international logistics services segment was impacted by a combination of rate declines and new business not materialising at the rate anticipated.?

The challenging market conditions experienced in the first half are expected to continue in the second half of the year.

Source: Transport Intelligence

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