Container shipping and logistics firm NOL Group reported 12% lower second quarter revenue and a $50m drop in earnings before tax and interest compared to 2012 as difficult trading in container shipping continued to hit the company’s financials. However, the group’s logistics arm, APL Logistics, saw strong profit growth, driven by business in emerging markets, which offset a slowdown in the company’s automotive logistics business.
NOL reported group revenues of $2.06 billion in the second quarter compared to $2.33 billion last year, while core profit dropped to a $35m loss compared to a $16 billion gain in 2012. In the first half, revenue was down 6% to $4.4 billion, while a cost efficiency programme helped core profit improve from a loss of $217m last year to $120m this year. Including the $200m sale of the company’s headquarters in Singapore in the first quarter, net profit improved to $41m compared to a loss of $371m last year.
A difficult market in the container shipping business was the clear culprit for NOL and its container shipping unit, APL. APL president Kenneth Glenn said weak demand coupled with an over-supply situation had weighed down revenue. As of the halfway point of the year, APL has taken delivery of 19 out of 34 new vessels planned, although the company said that the larger, more fuel-efficient ships will replace smaller and older ones in the fleet.
The news in the logistics business was more positive. Although revenue dropped 2% in the second quarter to $354m, core profits rose 11% to $10m following strong growth in Asia and the Middle East. Revenue in the first half was up 4% to $781m with core profits up a strong 18% to $26m.
The decline in second quarter revenue was down mostly to a 6% drop in contract logistics, which APL attributed to an unscheduled plant shutdown at an automotive plant in North America during the quarter, which the company did not specify. The weakness in automotive revenue, which came despite strong growth for the automotive industry in North America, was offset by 23% growth in emerging market revenue and a 15% rise in international logistics services.
Asia and the Middle East now make up 28% of APL Logistics’ first half revenue, compared to 23% last year. The Americas have dropped from 68% to 63% of revenue, while Europe remains 9%.
“While we were adversely impacted in the second quarter by an unseasonal slowdown in our automotive segment, all out other lines of business have grown on a year-on-year basis,” said Jim McAdam, APL Logistics’ president. “We are also pleased to see that our growth strategy in the emerging markets is being realised.”