Muted global demand in the shipping industry and lower freight rates have dragged Neptune Orient Lines deeper into the red, with a net loss of US$96.1 million (S$134.7 million) for the third quarter. This is more than treble the loss of US$23.1 million in the same period last year.
Net loss from continuing operations for the three months to Sept 30 was up 84 per cent, the shipping company said in a statement.
Revenue sank 28 per cent to US$1.21 billion, mainly due to lower liner revenue from void sailings, the absence of peak summer season, weak container trade demand and the challenging freight rate environment, said NOL.
The group's third-quarter financials do not include contributions from its former unit, APL Logistics, which was sold to Japan's Kintetsu World Express for US$1.24 billion. The deal was completed on May 29.
AT A GLANCE
REVENUE: US$1.21 billion (-28%)
NET LOSS: US$96.1 million (+316%)
The group said that its container shipping business APL saw turnover decline 29 per cent to US$1.2 billion during the quarter.
The weaker showing came as its average freight rates dropped 21 per cent, given the pressure from the over-capacity in the industry, while its volume contracted 11 per cent due to several factors, including a significant drop in United States exports and weak demand in the Intra-Asia short-sea market.
NOL said APL voided sailings in response to weak global demand and trimmed capacity in unprofitable trade lanes, which allowed it to maintain a high headhaul utilisation of more than 90 per cent. Its cost savings programme yielded US$80 million, bringing its total savings for the year to US$335 million.
"The absence of the traditional third quarter peak season in Europe and North America led to severe freight rates erosion in major trade lanes," said NOL group president and chief executive Ng Yat Chung in a statement, adding that the firm "continued to make good progress in managing costs".
"Unfortunately, this was more than offset by weak global demand and huge contraction in freight rates," he said. "NOL will continue to drive cost excellence and yield optimisation. The group's balance sheet has strengthened and we will invest when the conditions are right."
The group suffered a loss per share of 3.7 US cents for the quarter, up on the loss per share of 2.02 US cents previously.
Net asset value per share was up 44.8 per cent to 97 US cents as at Sept 18 this year, compared with the 67 US cents as at Dec 26 last year.
NOL was thrust into the spotlight in July after a Wall Street Journal report, citing unnamed sources, said that Singapore investment firm Temasek Holdings - which owns about 67 per cent of the company - had put it up for sale. Mr Ng, in a briefing then, had also said he was not ruling out the possibility of selling the firm.
NOL shares closed flat yesterday at 99.5 cents, before the results were released.