Neptune Orient Q1 loss widens, outlook bleak

SINGAPORE (Reuters): Neptune Orient Lines Ltd, the world’s seventh largest container shipper, reported a fifth consecutive quarterly loss, hit by low freight rates and soaring fuel costs, and warned of overcapacity in the container shipping sector.

The firm said its financial performance would remain weak if shipping rates do not improve and fuel costs remain high.

NOL, around two-thirds owned by Singapore state investor Temasek Holdings, reported January-March net loss of $254 million, much wider than a loss of $10 million a year ago, but lower than a loss of $320 million in the fourth quarter.

First-quarter revenue fell to $2.38 billion from $2.44 billion a year ago.

Analysts have been raising their earnings estimates and ratings on NOL over the last few months, as reflected by Thomson Reuters StarMine giving it a strong percentile score of 99 in a measure of change in analyst sentiment.

“There were positive signs in the first quarter - the freight rate increases in March and growth in the Logistics business,” said NOL Group CEO Ng Yat Chung. “But we must continue to aggressively manage our operating costs, and streamline our organisation for greater efficiency.”

Global shipping companies have been battered by weak trade due to uncertainties in Europe and a fragile U.S. economic recovery. Some industry executives have said that the unwillingness of many shipowners to cut capacity from the market was a further drain on the sector.

Maersk Line, the world’s largest container shipping firm, said in April it expects to lose money again in 2012 despite recent freight rate increases.