atans1

Scholar, ex-general still cannot stop NOL from sinking

In Logistics, S'pore Inc, Shipping, Temasek on 25/11/2014 at 4:41 am

At the end of October, NOL announced: that losses continued in the third quarter with the company $23m in the red compared to a net profit of $20m a year earlier, hit by port congestion in Southern California.

“We see a slowdown in emerging markets, partly driven by a lower need for raw materials from China. Europe – it’s very slow growth, if any, at the moment, and there’s no reason to expect a big change here,” said Nils Andersen,Maersk’s chief executive.

Revenues for the third quarter were flat at $2.06bn. For the first nine months of 2014 NOL lost $174m, compared to a $61m profit in the same period last year that included a one time gain from the sale of its headquarters building.

NOL claimed cost savings of $290m so far this year but these had been “largely offset” by lower rates, lower volumes and increased costs for port congestion.

http://www.seatrade-global.com/news/americas/nol-stays-in-the-red-port-congestion-hits-liner-arm-apl.html

But about a week later, FT carried this report: Denmark’s largest company by sales reported better than expected profits in the third quarter and lifted its profit outlook for Maersk Line, its container shipping business.

Maersk has bucked the trend in a container shipping industry dogged by overcapacity, losses and weak demand. Thanks to aggressive cost cutting and lower use of fuel, Maersk Line is by far the most profitable container group.

Maersk Line estimates its operating margin, which was 8.2 per cent in the second quarter, was 8.5 percentage points higher than the average of its rivals.

It lifted it again in the third quarter, posting an operating margin of 10.5 per cent, and leading Maersk Line to boost its guidance for the year for net profits to more than $2bn compared with $1.5bn previously. Net profit in the third quarter rose by a quarter to $685m.

“The days of rapid growth in containerised trade are over. We have to be happy as an industry that we are still growing . . . But we can still make good business,” said Mr Andersen.

But Maersk is more than just a container shipping group as the conglomerate has sought to emphasise its other businesses in recent years including oil exploration and production, port terminals and drilling rigs.

….

AP Møller-Maersk lowered its forecast for growth in global trade as the owner of the world’s largest container shipping line said a slowdown in emerging markets and Europe was weighing on demand.

The Danish group, seen as a bellwether for global trade as it carries 15 per cent of all seaborne freight, said demand had slipped in the third quarter compared with the start of the year and was now expected to increase by 3-5 per cent this year, down from 4-5 per cent.

So having a scholar, ex-SAF general and ex Temasek MD hasn’t done any favours for NOL, or S’pore Inc. On his watch (to be fair in really bad weather, he crashed NOL onto the rocks. Still in charge despite that , he has repeadely failed to stop the water from coming in.

The red ink continues to flow with plans to sell its APL Logistics unit in a sale that could fetch at least US$1 billion (S$1.27 billion).

Btw, local broker calls NOL a buy: http://www.ihsmaritime360.com/article/15494/neptune-orient-lines-gets-buy-rating-on-cheap-valuation.

Below shows trade flows across the Pacific. Maersk btw is based in Denmark and its traditional strength is the Asia, Europe trade. But it still dominates global shipping.

 

http://www.economist.com/blogs/graphicdetail/2014/11/daily-chart-9

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