---

Singapore's Neptune Orient Lines (NOL) has a posted a net loss for the first quarter of 2011 as higher fuel prices continued to put pressure on costs and weigh down earnings.

NOL, Southeast Asia’s largest container shipping line, reported a net loss for the first three months of this year of US$10 million compared to a net loss of US$98 million during the same period in 2010.

First quarter revenue was US$2.4 billion, up 16 percent from a year ago. First quarter Core EBIT (Earnings Before Interest and Taxes) was US$13 million, compared to a Core EBIT loss of US$74 million in the corresponding period last year.

“In spite of year-over-year volume growth, a softer than expected Lunar New Year period and rising fuel costs have interrupted our momentum,” said NOL Group President and CEO Ronald D. Widdows.

According to Bunker Index data the average price of 380-centistoke (cst) fuel during the first three months of 2011 in Singapore - NOL's principal port of call - increased by US$128 per tonne, or 27.5 percent, to US$583 per tonne from US$465 per tonne during the same period last year.

In its financial summary, NOL confirmed that the bunker fuel spot price per metric tonne had risen by 28 percent year-on-year during the first quarter.

Business Segments

APL, the liner shipping business of NOL, reported first quarter 2011 revenue of US$2.1 billion. That was a 15 percent improvement over the same period a year ago. APL announced a US$8 million Core EBIT loss compared to a US$89 million Core EBIT loss in the first quarter of 2010. Liner shipping volume increased 9 percent in the first quarter from a year ago. Average revenue per FEU (forty-foot equivalent unit) increased 3 percent. Vessel utilization in the first quarter was 92 percent.

“We lifted higher container volumes in the Asia-Europe and Intra-Asia trade lanes during the first quarter, and freight rates improved in the Trans-Pacific,” said APL President Eng Aik Meng. “But our emphasis must remain on operating efficiency, as well as slow-steaming our ships to conserve fuel and counteract the effect of rising fuel prices, which were 28 percent higher per metric tonne in the first quarter of 2011 than they were in 2010.”

APL Logistics, NOL’s supply chain management business, reported first quarter revenue of US$368 million, up 24 percent from a year ago. Core EBIT was up 40 percent in the quarter to US$21 million and the Core EBIT Margin was 5.7 percent, compared to 5.1 percent in the first quarter last year. The improvements were attributed to higher volumes and recovering unit rates across Logistics’ various businesses. Contract logistics revenue increased 23 percent in the first quarter and international services revenue was up 26 percent.

“Our commercial performance continues to gain strength across multiple services which have been improving since the middle of last year,” said APL Logistics President Jim McAdam. “We’ve maintained a disciplined focus on cost of operations and are witnessing consistent growth in emerging markets— both in our international logistics business as well as in the contract logistics-automotive segments.”

Outlook

In its outlook for the rest of the year NOL said: "Market conditions remain uncertain. Increased operating costs – particularly related to fuel cost increases -- and competitive pressure on rates are expected to continue for the near term. Should these conditions persist, our results will be negatively impacted. Our focus remains on operating efficiency, cost reduction and high vessel utilization."