After rallying 39.4% in the first four months of this year to its highest trading levels since March 2013, NOL has retreated 13% over the last three weeks. Since its result announcement on 14 May, it has succumbed below the $1.10 level, closing at $1.035 yesterday.

NOL’s first quarter 2015 (1Q15) results continued to register a loss, though it was an improvement over the previous quarter and same period last year. The transpacific route, to which NOL has the highest exposure, is poised to see higher freight rates and profitable contracts. Shipping lines are planning another rate increase on 1 June 2015…

NOL still in the red
NOL’s reported a 1Q15 net loss of –US$11 million, an improvement to last quarter’s –US$137mn loss and ast year’s –US$98 million loss over the same period. The smaller loss was helped by its container shipping business which was back in the black on lower costs due to lower fuel costs which in turn, offset lower freight rates.
 
Its APL logistics unit continues to drive steady revenues, bringing in US$17 million in 1Q15. NOL noted that its recent sale of APL Logistics for US$1.2 billion will likely be completed by mid-2015, allowing it to book an exceptional gain of US$959 million from the sale only then.
 
Upcoming freight increase
While the company said in a statement that ‘freight rates remain challenged by persistent overcapacity in the container shipping industry’, rates appear to have bottomed. Two weeks ago, Asia Europe spot freight rates rebounded to US$861/TEU from US$343/TEU. Shipping lines are planning another rate increase of US$1,000on 1 June.

Source: Macquarie Research - 26 May 2015