NOL posts disappointing 2015 results

Following the divestment of APL Logistics which was completed in May 2015, NOL Group’s financial results unsurprisingly declined year-on-year. The Group has announced Q4 2015 revenue of US$1.28bn, a decline of 42.68% year-on-year (Q4 2014 revenues included APL Logistics revenues of US$421m). EBITDA for the quarter stood at US$39m which represented a decline of 57.61% over the same period in 2014. Consequently, Q4 2015 margin stood at 3.05%.

The Group reported a Q4 2015 net loss of US$77m, an improvement of US$8 million over Q4 2014. The Group posted a Core EBIT (Earnings Before Interest, Taxes and Non-Recurring Items) loss of US$65m in the quarter.

On a full year basis, NOL posted revenues of US$6.02bn which represented a decline of 30.13% year-on-year. EBITDA for the period stood at US$312m, a decline of 1.58% from 2014. Consequently, margin for the 2015 financial year stood at 5.18%.

Excluding a one-time US$888m gain on the sale of its logistics unit, NOL incurred a full year net loss of US$181m, an improvement of 30% over last year. NOL’s full year core EBIT loss reduced 5% year-on-year to US$72m.

Aside from the effects of the APL Logistics divestment, NOL Group attributed the poor financial results to a number of factors including economic slow-down in China, low freight rates across key trade lanes and overcapacity resulting in continued decline in volumes.

NOL Group President and CEO Ng Yat Chung said of the results, “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.” Despite the poor performance of the company, Chung added, “Nonetheless, APL continued to reap cost savings and yield improvements. On a full year basis, its total costs of sales per forty-foot-equivalent unit (FEU) continued to offset the decline in total revenue per FEU, helping APL to continue reducing losses.”

With freight rates expected to remain under pressure, NOL announced it would continue to focus on cost and operational efficiencies, as well as yield and network capacity management.

APL Liner reported a Q4 2015 revenue of US$1.28bn in the final quarter of 2015, a 29% contraction from the year before. Average freight rates fell 22% amidst pressure from over-capacity in the industry. Volume slid 12% in the quarter over the prior year, mainly due to a reduction in backhaul volumes out of the US and the Gulf. In response to weak global demand, APL maintained management of its deployed capacity, while keeping its head haul asset utilisation rate at 90%.

The container shipping line announced it has maintained its cost management as well as a yield-focused trade strategy that emphasised network rationalisation and better cargo selection. APL achieved cost savings of US$100m in 4Q 2015, bringing its full year cost savings to US$435m. As a result of the cost savings and lower bunker price, APL’s total cost of sales per forty-foot-equivalent unit (FEU) fell by 17% year-on-year.

APL narrowed its Core EBIT loss from US$139m for the full year in 2014 to US$98m in 2015. This is APL’s fourth consecutive year of reduced losses.

Source: NOL Group