THIRD-QUARTER LOSS WIDENS TO $67 MILLION AT P&O NEDLLOYD
P&O Nedlloyd Container Line, the Anglo-Dutch carrier, suffered a pre-tax deficit of $67 million in the third quarter, as declining freight rates continued to eat into its operating results.
The loss for the latest quarter compares with a pre-tax profit of $16 million in the third quarter of 2001.
For the first nine months of this year, P&O Nedlloyd posted cumulative pre-tax losses of $213 million, substantially worse than the $66 million pre-tax profit earned in the corresponding period of 2001.
For the third quarter of this year, the Anglo-Dutch carrier posted total revenues of $1.06 billion, 1 percent down on its revenues a year earlier. While its global carryings rose by 11 percent during the period, to 929,100 TEUs, revenue by TEU fell by 11 percent, to $1,057.
The carrier’s operating result for the latest quarter was a loss of $46 million, as compared to a profit of $32 million a year earlier.
P&O Nedlloyd also recorded a $5 million restructururing charge in the latest quarter, as compared to restructuring costs of $2 million in the same quarter of 2001.
Commenting on its operating loss in the third quarter, P&O Nedlloyd said that higher fuel prices had an adverse impact of $19 million, when compared with the third quarter of 2001.
“The main factor affecting the result continues to be low revenue rates, which were 11 percent down on the third quarter of 2001,” P&O Nedlloyd said.
Although the carrier’s average revenue rate was down on the same quarter a year ago, it edged up by 0.6 percent when compared with revenue rates in the second quarter of 2002.
“Sustained increases have been achieved on the important Europe-Asia trades although rates in some other trades remain under pressure,” the carrier said.
This was the first quarterly improvement in average revenue rates since the first quarter of 2001.
P&O Nedlloyd continues its cost reduction programs.
It reported that the recent U.S. West Coast port labor dispute had no effect on its third-quarter results. However, P&O Nedlloyd estimates that the dispute will have a maximum impact of approximately $10 million on its full year result.
Commenting on its trading prospects, P&O Nedlloyd said that the improving trend in revenue rates may be partly offset by higher fuel costs and also the continuing weakness in the U.S. dollar.
“However, utilization levels are high and the worst effects of over-capacity in 2002 appear to have been resolved,” it said. Improving revenue rates and continuing strong volumes provide the basis for “a more positive outlook than for some time.”
The Anglo-Dutch carrier said that, for 2003, the number of new vessel deliveries for the industry as a whole is expected to have an adverse impact on the supply/demand balance, particularly while world trade growth prospects are uncertain.
The Nedlloyd group, which owns 50 percent of P&O Nedlloyd, said it was “cautiously optimistic” about recovery prospects at P&O Nedlloyd.
“P&O Nedlloyd’s rates on the Europe-Asia trades were up in the course of the third quarter for the first time in eighteen months,” said Haddo Meijer, chairman of Nedlloyd. “Furthermore, the positive effect of P&O Nedlloyd’s cost savings programs is becoming increasingly visible,” he added.