Singapore-listed NOL reported a first quarter net profit of $121m up 183% year-on-year. Revenues for the first quarter stood at $2.4bn a jump of 27% compared to the previous year.
As fears of a US recession grow NOL said that its container shipping arm APL saw a 2% contraction in US West Coast volumes in the first quarter, compared to an industry wide contraction of 8%.
“Our increased revenue clearly shows our group is well positioned in a growth industry. At a time of economic uncertainty and unprecedented fuel costs, we have again illustrated the viability of our business model and our strong focus on cost management,” said Thomas Held, chief executive of NOL.
Overall APL saw Transpacific volumes grow by 16% in the first quarter of 2008, as the traditionally weak backhaul leg received a boost from the low value of the US dollar.
“US economic uncertainties arising from the weak housing market and sub-prime issues resulted in slower headhaul volume growth. However, weaker US dollar and improved utilization has generated significant improvement in backhaul volume and rates,” the company said.
Overall average container freight rates across all trades increased 16% to $2,934 per feu in the first quarter compared to the same period a year earlier.
Average rates on the Americas trades in the first quarter of 2008, which includes the Transpacific, were $3,486 per feu up 7% year-on-year, for Europe average rates were $3,216 per feu up 25% year-on-year and for Asia and the Middle East $2,014 an increase of 24% over the previous year.
Overall profits before tax and interest expense for container shipping were $108m in the first quarter of 2008, a 286% increase on the previous year. The growth in profits came despite the continued rise of fuel cost which averaged $472 per tonne for 380cst in the first quarter of 2008, compared to just $164 per tonne four years earlier.
“Higher bunker prices continue to put pressure on cost, even though bunker recovery in certain trade lanes and a continued conservative hedging policy has helped to minimize the impact of rising bunker prices,” the company said.
With a 6% seasonal reduction in capacity APL was able to keep its ships running at 95% of capacity for headhaul trades.
Lower volumes in the US West Coast impacted NOL’s terminal business with earnings before tax and interest $12m in the first quarter of 2008 compared $21m a year earlier.
“Some softening of demand in the Transpacific west coast trade coupled with network optimisation initiatives resulted in lower volumes at our US west coast terminals. This impacted the contribution of our terminals activities. In the mid to longer term, we expect west coast volumes to recover,” Dr Held said.
The company made no reference to the possibility of mergers or acquisitions, although it is widely expected to bid for Hapag Lloyd, and has been repeatedly linked to the German line in recent months.