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February 10, 2009

Red ink at NOL

Container line APL's parent Neptune Orient Line (NOL) Group has reported a fourth quarter of 2008 net loss of US$149 million and a loss at core EBIT level of US$45 million.

The Singapore-based group reported a net profit for 2008 of US$83 million, after restructuring charges of US$72 million. This was 84% lower than 2007. The group's 2008 core EBIT of US$213 million was down 64% from the prior year, while revenue for 2008 was up 14% year-on-year to a record US$9.29 billion.

NOL Group President and Chief Executive Officer, Ron Widdows, said: "The results we are announcing today show the impact of a severe market downturn in the latter part of 2008, caused by reduced consumer confidence in the wake of the global economic crisis. They also take account of significant restructuring costs, which reflect actions taken in the fourth quarter to place the company on a better footing for the conditions ahead."

"The severity of the collapse in global trade over recent months is without precedent," he continued. "Since late September 2008, we have seen a consistent, week-by-week drop in shipment levels across nearly all trade routes."

"Though we recognized early the pattern of decline in market conditions, and took decisive action to reconfigure our business, the adjustments could not fully counter the speed and dramatic nature of the downturn being experienced in global container trades."

Mr. Widdows said the company had acted during the fourth quarter to restructure operations, rationalise container shipping assets and reduce its global workforce.

"We will continue to adjust our business to ensure we weather this storm and emerge from it in the best possible shape. As we navigate through the current tough conditions, we do so with an eye to positioning our business for future growth and to take advantage of the considerable opportunities that will arise in the wake of this business downturn," he said.

Continuing positive operating cash flows through 2008 have ensured the company's balance sheet remains strong. At 26 December 2008 the Group had net debt of US$816 million and a net gearing level of 0.33 times.

NOL's outlook statement said: "Container shipping and related businesses are in the midst of a pronounced downturn which is expected to extend through 2009. Reduced consumer demand worldwide, coupled with excess supply of new vessel tonnage is creating a very difficult business environment.

"Conditions similar to those in the fourth quarter of 2008 are expected to continue through 2009. NOL anticipates reporting a loss for the year 2009.

"The Group has undertaken a restructuring and will continue to lower its cost base, mitigate losses and improve productivity so as to emerge stronger when the upturn occurs."

The NOL Board of Directors has recommended a final tax-exempt (one tier) dividend of 4 Singapore cents per share to be paid on 5 May 2009 to the shareholders whose names appear on the Company's share register at close of business on 21 April 2009. This is in addition to the interim tax-exempt (one-tier) dividend of 4 Singapore cents per share paid in September 2008. The total dividend for the 2008 performance year will be 8 Singapore cents per share.

NOL's current dividend policy is to pay the higher of an annual dividend of 8 Singapore cents per share net, or a full-year dividend of 20% of net profits after tax. The Directors have decided that going forward the company will pay an annual dividend of 20% of net profits after tax.


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