Royal P&O Nedlloyd announces first half year success

Royal P&O Nedlloyd N.V. (RPONL) has announced its first half results for the 6 months ended 30 June 2005. Highlights of these results were: Operating profit up by 92 per cent to $ 213 million (2004: $ 111 million*) and Revenue up by 15 per cent to $ 3,617 million (2004: $ 3,135 million).

Operating profit at $ 213 million before interest and tax amounts to an improvement of $ 102 million over the same period in 2004. Turnover from operations increased by 15 per cent to $ 3,617 million (2004: $ 3,135 million).

A key factor in this improvement was the increase of 13 per cent in average freight rates compared with the same period in 2004. Increases were strong in the European North/South trades which reflects the increased reefer capacity and favourable supply and demand position, and Asia trades which benefited from continued growth in manufacturing in Asia.

Volume growth was 3 per cent, and limited by our capacity growth in the first half, which will pick up in the latter part of 2005 with new vessel deliveries. Strongest growth was on the European North/South and Trans-Pacific routes.

Average unit costs were 10 per cent higher than in the first half of 2004. Approximately a quarter of this was due to the weakness of the US dollar. Other significant factors were higher charter costs and the worsening imbalance in the major trades reflecting the balance of trade between Asia and Europe / North America. Fuel costs were higher than 2004; the average bunker cost in the first half of 2005 was $ 205 per tonne, up by 24 per cent on 2004 after taking account of hedging.

In the second quarter of 2005, turnover was $ 1,895 million (Q2 2004: $ 1,655 million), an increase of 15 per cent. Operating profit in the second quarter of 2005 was $ 139 million (Q2 2004: $ 90 million) - up some $ 49 million year on year. Q2 volumes increased by 2 per cent to 1,067,000 Teu (Q2 2004: 1,051,000 Teu), and average second quarter freight rates were $ 1,569 / Teu compared to $ 1,393 / Teu in 2004 (an increase of 13 per cent).

Revenue rates remain well ahead of 2004 as the rate increases achieved during 2004 and early 2005 have been successfully maintained, especially in the North/South trades.

Trans Atlantic revenue rates are up by 11 per cent whilst volumes are 5 per cent down on 2004; this reflects the focus on yield management analysis and the subsequent reduction of the lowest contributing cargo.

The Pacific trade volumes continue to grow well helped in part by an increased focus on lower rated US exports to minimise imbalance costs. The standstill on revenue rate compared to 2004 is largely caused by this mix change.

Other North America volumes show a significant decline compared to 2004. This is due to the withdrawal from a loss making service earlier in the year. The significant year-on-year revenue rate increase is a result of the strong market from South America.

Asia trades continue to perform strongly. The limited capacity increases seen on these trades in the first half have restricted the possible volume increases but rates improved year on year by 23 per cent.