Neptune Orient Lines Ltd. (NOL), Southeast Asia’s biggest container-shipping company, posted a profit in the first quarter, helped by gains from selling its headquarters and lower fuel costs.
Net income in the three months ended April 5 was $75.5 million, compared with a $254 million loss a year earlier, the shipping line said in a statement to the Singapore stock exchange today. Sales slipped 0.4 percent to $2.37 billion.
Neptune Orient has said cost cuts and new ships will help improve performance in 2013 after posting three annual losses in four years. The carrier pared costs by $504 million last year as shipping lines struggled with overcapacity and a slump in demand caused by Europe’s economic downturn.
“The Group’s cost base will continue to improve as it takes delivery of newer and more efficient ships,” the company said. “However, the container shipping industry remains saddled with overcapacity.”
Neptune Orient had a gain of $200 million from the sale of its headquarters building, it said. The ship operator is also adding larger and more fuel efficient vessels amid rising competition.
Shares of Neptune Orient, whose businesses include container shipping, terminals and logistics operations, were unchanged at S$1.09 at close of trading in Singapore, before the earnings were released. The stock has dropped 4.8 percent this year, compared with the Straits Times Index’s 8.4 percent gain.
APL Ltd., Neptune Orient’s container-shipping arm, earned an average revenue per box of $2,376, a 1.8 percent decline. It moved 772,000 forty-foot equivalent cargo boxes in the quarter, 2 percent fewer than a year earlier. The shipping unit filled 91 percent of capacity in the three-month period, compared with 93 percent a year earlier.
Loss before interest and taxes at APL narrowed to $101 million in the quarter, from $246 million a year earlier.
Spot rates to haul a 20-foot container to Europe from Asia dropped 6.4 percent to $1,140 in the first quarter, according to the Shanghai Shipping Exchange. Those to the U.S. West Coast rose 1.8 percent to $1,132. Lines need at least $1,200 to make money, according to shipbroker ICAP.
The price of 380 Centistoke marine bunker fuel, used by ships, averaged $633.76 per metric ton in the first quarter, 14 percent lower than a year ago in Singapore trading, according to data compiled by Bloomberg. It dropped 2.3 to $600 today.
APL operated 125 vessels with a combined capacity of 605,000 20-foot boxes as of April 5, Neptune Orient said in the statement. It has received 10 ships last year, and will add 14 more in 2013 and 10 in 2014.
“We have improved operational performance considerably from one year ago, so we know we are on the right track,” Chief Executive Officer Ng Yat Chung said in the statement. “But there is still more work to be done.”
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