Neptune Orient Lines (NOL) Suffers Huge Losses - Big Ouch For Temasek!

Here's another significant set of news.

• Neptune Orient Predicts 2009 Loss as Recession Damps Trade
  
  By Chan Sue Ling and Seonjin Cha
  
  Feb. 10 (Bloomberg) -- Neptune Orient Lines Ltd., Southeast Asia’s biggest container carrier, said it will report a loss this year as the global recession damps demand for transporting Asian- made goods.
  
  The company had a net loss of $149 million in the fourth quarter of last year compared with a profit of $196 million a year earlier, it said in a statement today. It’s the first quarterly deficit in six years. The Singapore-based shipping line didn’t elaborate on the loss prediction.
  
  Neptune Orient’s cargo fell 14 percent in the last quarter as the global recession cut demand to move Asian-made toys and furniture. The worst economic crisis since the Great Depression has hammered rates, prompting Neptune Orient, A.P. Moeller-Maersk A/S and other lines to take vessels out of service, cut routes and eliminate jobs.
  
  “The container-shipping industry is just starting to get worse,” said Um Kyung A, an analyst at Shinyoung Securities Co. in Seoul. “There’s no guarantee we can see a recovery in the second half.”
  
  Neptune Orient’s fourth-quarter results included $72 million of “restructuring charges,” which comprised costs for eliminating some jobs, Cedric Foo, chief financial officer, told reporters after the results. An annual net loss would be the first in seven years, according to data compiled by Bloomberg.
  
  Neptune Orient gained 5.1 percent to S$1.24 at the close of trading in Singapore today. The results were announced after the stock market closed for trading. The stock tumbled 71 percent last year, the biggest annual drop in at least two decades, according to Bloomberg data.
  
  ‘Pronounced Downturn’
  
  APL Ltd., Neptune Orient’s container-shipping unit, carried 574,300 forty-foot equivalent boxes in the three months ended Dec. 26, based on company filings. Average container freight rates gained 7.2 percent in the quarter to $3,077 per forty-foot equivalent unit.
  
  “Container-shipping and related businesses are in the midst of a pronounced downturn which is expected to extend through 2009,” the company said. “Reduced consumer demand worldwide, coupled with excess supply of new vessel tonnage is creating a very difficult business environment.”
  
  No Growth
  
  The global economy will show little or no growth this year as more than $2 trillion of bad assets in the U.S. help sink economies from Russia to the U.K., the International Monetary Fund said Jan. 28. Consumer spending in the U.S. fell in December for a record sixth consecutive month, capping the worst year since 1961, as companies slashed 2.6 million jobs last year.
  
  “Freight rates have dropped and volume growth this year is much worse than expected,” said Ryu Jae Hyun, an analyst at Mirae Asset Securities Co. in Hong Kong. Rates could fall by 35 percent this year and 7 percent in 2010, HSBC Holdings Plc analysts Azura Shahrim and Mark Webb wrote in a Jan. 15 report.
  
  Neptune Orient said in November it planned to slash 1,000 jobs, or 9.1 percent of its workforce, due to weakening demand and a “grim” profit outlook.
  
  The company expected that the job cuts, mostly in North America, would lower fourth-quarter earnings by about $33 million. It also pared capacity on the Asia-Europe and transpacific routes by 25 percent and 20 percent.
  
  Neptune Orient said new vessel commitments, both owned and chartered, total 28 with deliveries due to begin this year. Some deliveries have been pushed back to 2012, Eng Aik Meng, president of the liner division, said at a press conference today. The company may also return some ships to owners as charters expire, depending on demand, he added. As at December, the company had idled 12 ships.
  
  The company plans to pay a total dividend of 8 Singapore cents a share for 2008 and will give annual payouts of 20 percent of net profit going forward.

Source: here

Here is the chart of NOL.

And guess what?

Business Times carried a snippet of this news. Neptune Orient Lines swings into the red

• SINGAPORE: Singapore container shipper Neptune Orient Lines swung to a loss in the fourth quarter following a slump in cargo volumes due to the global economic downturn.
  
  NOL, 66 per cent-owned by state investor Temasek, posted US$149 million (US$1 = RM3.59) in net loss for the three months ended December 31, compared to a net profit of US$196 million a year ago. NOL a loss for 2009. — Reuters

NOL is 66 per cent-owned by state investor Temasek????

Big Ouch yet again for Temasek!

See also this posting: Temasek Holdings Chalking Up Massive Paper Losses Everywhere!

On Star Business: Temasek portfolio 31% down in eight months: Report

• SINGAPORE: The portfolio of Singapore sovereign wealth fund Temasek Holdings, which helped bail out Wall Street icon Merrill Lynch, fell 31% over eight months last year, a minister said yesterday, according to local radio.
  
  The report followed Temasek’s announcement last Friday that the wife of Singapore’s prime minister will step down after five years as chief executive of Temasek, one of the world’s largest sovereign wealth funds.
  
  Senior Minister of State for Finance Lim Hwee Hua told parliament that Temasek’s portfolio of investments fell to S$127bil (US$84.7bil), 31% down from S$185bil, in the eight months to the end of November, 938Live radio reported.
  
  But Lim said the fall in Temasek’s portfolio value was less than declines in two stock indices, including the MSCI Singapore Index, which she said dropped 44% in Singapore dollar terms over the same period, the report said.
  
  The departure of Temasek chief executive Ho Ching, wife of Prime Minister Lee Hsien Loong, comes amid questions over some of its investments, most recently the billions pumped into former US investment bank Merrill Lynch since December 2007.
  
  Merrill Lynch suffered massive losses from high-risk US subprime mortgage investments, and Bank of America acquired it on Jan 1 after fears rose over whether the Wall Street firm would survive.
  
  Last August Temasek announced that in the year to March its portfolio rose in value to S$185bil, up 13% from the previous year.
  
  It also reported a record profit of S$18.2bil for the year.
  
  Lim was responding in parliament to queries about how the global financial crisis has affected Temasek and the country’s other sovereign wealth fund, the Government of Singapore Investment Corp (GIC).
  
  In late 2007 and early last year GIC injected billions of dollars into Swiss bank UBS as well as US banking giant Citigroup, both of which suffered massive losses from US subprime, or higher-risk, mortgage investments.
  
  Subprime troubles later evolved into the worldwide financial slowdown.
  
  UBS Tuesday posted an annual loss of US$17bil, the largest in Swiss corporate history, and announced 2,000 new job cuts.
  
  Lim said this was not the first time GIC and Temasek have seen major declines in markets.
  
  ”In spite of these market gyrations, including the current downturn, for the 20-year period to late 2008 Temasek had achieved annualised returns of about 13% ,” she said on 938Live.– AFP
  
  ”GIC, which has a more diversified and conservative portfolio, has also had creditable returns over the 20-year period.”
  
  GIC, one of the world’s largest sovereign wealth funds, in September said its nominal rate of return over the past 20 years was 7.8% in US dollar terms.
  
  Sovereign wealth funds are a form of government-created investment vehicle.
  
  Lim said GIC and Temasek had the resources to weather ups and downs over multiple economic and market cycles.
  
  Temasek chairman S. Dhanabalan insisted Friday there was no connection between Ho’s departure and the Merrill Lynch stake, or an earlier controversial venture into Thailand’s Shin Corp.