High fuel costs and lower freight rates halve NOL's gains

NEPTUNE Orient Lines (NOL) has suffered a 55 per cent plunge in full-year profit to US$363.7 million (S$556 million), as it clocked in a weaker-than-expected fourth quarter.

Higher fuel costs and lower freight rates continued to sink the carrier's bottom line, with fourth-quarter earnings diving 70 per cent to US$49.4 million, far lower than the US$72 million median forecast by a Bloomberg News poll of eight analysts.

But the shipping line is accelerating expansion plans for its fleet and port facilities amid improving market sentiment.

NOL's latest initiative, announced yesterday, will see it team up with Chinese shipping line SITC Group to develop a terminal in Qingdao, China's third- busiest container port.

'NOL delivered a solid performance in 2006 in the face of a difficult operating environment,' said chief executive Thomas Held, who was chairing his first results press conference at NOL.

'Our results show the combined impact of lower average freight rates and increased fuel costs over the past year.'

Dr Held, who joined NOL last November, said the Singapore firm had performed better than many of its rivals, which have also reported lower profits for last year.

The container shipping industry has been struggling with oversupply fears since last year, as record shipping earnings in previous years spurred a strong expansion of the global fleet.

This has sent freight rates falling as carriers jostle to keep their ships filled and maintain market share.

NOL is a case in point, with revenues flat at US$7.26 billion last year despite the carrier moving 8 per cent more boxes.

Competitive pricing pressures and changes in volume mix led to a 7 per cent fall in average revenues per container.

The bottom line was further hit by higher fuel prices, which raised total fuel costs for its liner business by US$237 million.

NOL said most industry analysts expect the container shipping market to remain in oversupply and fuel prices are also expected to stay high.

But Mr Ron Widdows, who heads NOL's liner business, noted that sentiment is improving, with freight rates rebounding on Asia-Europe routes.

He added that trade growth has also been outpacing the best of estimates in previous years, indicating a potential upside for shipping companies. But he stopped short of predicting a rate recovery in Trans-Pacific services, the biggest contributor to NOL's liner sales.

NOL will increase spending on ships and other capital equipment this year to US$729 million, from US$178 million.

It will add seven ships to its fleet this year, boosting capacity by 10 per cent. It is also expanding some of its ports in the region. The new Qingdao terminal will cost a few hundred million US dollars, said Mr Widdows.

Full-year earnings per share were 25 US cents, down from 55.35 US cents the previous year. Net asset value per share was US$1.45, down from US$1.79. A final dividend of four cents per share has been recommended.

NOL shares fell 14 cents to close at $3.10 yesterday, ahead of the results announcement. The decline came amid the worst marketwide fall in eight months.

bryanlee@sph.com.sg

Terry's fine, Blues relieved

LONDON - JOHN Terry has been given the all-clear after being kicked in the head during Sunday's 2-1 League Cup final win over Arsenal.

The Chelsea captain made a remarkable return to the Millennium Stadium - less than two hours after being rushed to hospital following the horrific accidental kick.

The England captain was knocked unconscious by Arsenal midfielder Abou Diaby's high kick as he tried to head the ball in the Gunners' penalty area in the 56th minute.

He fell awkwardly, landing flat on his face, and players of both teams beckoned for urgent medical attention.

It was reported that he had swallowed his tongue, and was seen being given oxygen as he was treated on the pitch.

Terry had made a remarkable recovery to play in Cardiff.

He had suffered an ankle injury while on Champions League duty in midweek and had been expected to miss the final.

But he played and was in the thick of action - until the 56th minute.

Lying unconscious on the ground, he needed several minutes' attention from the physiotherapists of both clubs. He was eventually put in a neck brace and carried off on a stretcher.

The defender regained consciousness in the dressing room but was groggy. He was then taken to a hospital for scans on his head and neck.

But, two hours later, he returned to the stadium - still in his kit - to join his celebrating teammates.

And he showed no ill effects as he hugged Arsenal and England physiotherapist Gary Lewin.

However, Chelsea manager Jose Mourinho admitted that thoughts of the horrific skull fracture Petr Cech suffered at Reading flashed through his mind for a few moments when he saw his captain go down.

In the same match, replacement goalkeeper Carlo Cudicini also suffered a head injury.

Said Mourinho: 'Sometimes in football, dramatic things happen.

'This season, we have already had the situations with Petr Cech and Carlo Cudicini and the negative thoughts come directly to your mind.

'The first point is, 'Is he safe? Is the man fine?'

'John's wife, his little babies, are here, so the most important thing is that the man is safe.

'Once we know he is okay, then we can think about the football.'

Although he did not see what happened, he apportioned no blame to Diaby, who was in tears as Terry was put on a stretcher.

Ironically, Diaby kicked the defender with such force that he jarred an ankle and was eventually substituted.

He is expected to miss Arsenal's FA Cup fifth-round replay against Blackburn tomorrow.

'John risked himself and the Arsenal player was trying to protect his goal,' said Mourinho. 'I have no criticism about that.'

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LONDON - MARTIN Jol will stay true to Tottenham's attacking traditions, after his side's cavalier approach clinched a dramatic win at Everton.

Spurs tasted success in the English Premiership for the first time since Boxing Day, as Jermaine Jenas' last-minute goal gave them a 2-1 victory on Wednesday.

The Goodison Park triumph was just Tottenham's second away win in the league this season.

A streak of six league games without a win and a League Cup semi-final exit against Arsenal had put Jol under pressure.

This win, coming just four days after an FA Cup fifth-round success at Fulham, lifted the gloom around White Hart Lane.

Jol believes Jenas, Aaron Lennon, Dimitar Berbatov and Robbie Keane need to be let off the leash, if Tottenham are to enjoy a successful end to the season.

The London club have a long-standing reputation for attacking football.

Jol said: 'In the first half, we were excellent. We took control of the game.

'It was not quite the same after the break. But they only worried us with the long ball and long throws.

'We decided to go for it, to put on attacking players. I was very pleased that it was us, the away side, going for the victory in those closing stages.'

Berbatov gave Tottenham the lead in the 35th minute.

Mikel Arteta equalised with a free kick given by referee Uriah Rennie, even though the assistant referee had signalled for a free kick to Spurs. Jenas then snatched the points for the London side.

Everton manager David Moyes came in for some criticism at full-time, as angry fans vented their frustrations over his substitutions.

The Goodison faithful felt he was wrong to take off Portuguese midfielder Manuel Fernandes. Jenas' late strike only confirmed their fears.

But Moyes defended his decision.

He said: 'Sometimes, you make decisions that work, sometimes, they don't.

'We felt we had to take off Manuel Fernandes towards the end, even though he had been a threat, because he was tiring.

'We also took off striker Victor Anichebe at the break, and sent on Gary Naysmith in midfield because we had been outplayed in that first half.

'We had to take a brave decision and, in many ways, it worked. We were the better side after the break and created chances. It was a real blow to lose it like that.

'I understand the fans' frustrations. No one is more frustrated than me.

'But I felt we were more likely to win it in the closing minutes than them.'

AGENCE FRANCE-PRESSE

Hammers chairman backs Curbishley '100 per cent'

LONDON - WEST Ham chairman Eggert Magnusson has given his '100 per cent backing' to manager Alan Curbishley, insisting there is no deadline for him to turn the club's fortunes around.

The Icelandic businessman has been infuriated by reports that he has given Curbishley three matches to get the Hammers back on the winning track.

West Ham have won only once in 10 Premiership games since Curbishley replaced Alan Pardew as manager.

But Magnusson is adamant he has the right man for the job, reported The Daily Mail.

He said: 'To put the record straight, Alan has my 100 per cent backing.

'He has had it since day one and he has it going forward. He is the right man for this job, and he will take us through this difficult stage.

'Talk of a three-game deadline is nonsense, I hope that Alan is here for the long-term.'

Magnusson, who celebrated his 60th birthday yesterday, insists his ties with Curbishley have been strengthened by working together during the January transfer window.

He added: 'We spent a lot of time with my deputy Scott Duxbury - often until very late in the evening - sitting together and working out our plans.

'It was a learning experience for me, and I feel it made our ties that much stronger.

'I have experienced that life is not always easy. There are always difficulties to overcome, but the only way to get past them is to fight to turn them into advantages.

'That is how I have directed my life and that is what we will do at West Ham.'

Magnusson has, however, slammed Pardew, claiming there was dressing-room unrest while he was in charge.

He sacked Pardew in December after a disastrous run.

He will come face-to-face with Pardew on Saturday, as West Ham travel to Charlton for a crucial relegation battle.

The Icelander has already stoked the fires ahead of the clash by suggesting Pardew had lost the dressing room at West Ham.

'There was no purpose to talk about it publicly at the time,' Magnusson told the News of the World.

'But the key factor was that something was just not right in the dressing room.

'Tension had been building between the players and the manager for a while.

'There was a cancer we had to cut off.'

Porto the real test for Chelsea

LISBON - CHELSEA'S recent revival faces its first real test today, when the English champions take on their Portuguese counterparts, FC Porto, in the Champions League.

The English club's manager, Jose Mourinho, has likened the match to a final.

He said: 'This week, we have two finals. Porto is like a final, and the one against Arsenal is really a final.'

Chelsea play Arsenal in the League Cup final on Sunday.

But, before that, Mourinho returns to the club he guided to the 2003 Uefa Cup and 2004 Champions League triumphs.

He brings with him a squad that has put together a run of six successive wins without conceding a goal since they were beaten 0-2 by Liverpool at Anfield at the end of last month.

On the back of those performances, the manager has done his best to foster a sense that his men have gone through their sticky patch and emerged unscathed.

It is a belief which, he claimed, led him to rest Claude Makelele and Ricardo Carvalho for last Saturday's FA Cup tie with Norwich.

'Because the team are in a good moment, winning matches, confidence back, I thought I could give some players a rest,' he nonchalantly explained, after watching his side win 4-0.

Closer scrutiny of the winning sequence, however, suggests that the 'business as usual' rhetoric, if not total bluster, could yet prove to be premature.

Three of the six victories were recorded against lower- league opposition - Nottingham Forest and Norwich in the FA Cup and Wycombe in the League Cup.

Middlesbrough and Blackburn were outclassed in league matches at Stamford Bridge.

However, the scrappy 1-0 win at relegation-threatened Charlton will have been accorded equal significance by the rest of Europe's elite.

Unlike Charlton, Porto are a side in form.

A 4-0 hammering of Naval last Friday allowed them to pull four points clear at the top of the Portuguese top flight.

And, as Mourinho knows only too well, the Estadio do Dragao is an intimidating venue, where English clubs have not prospered in recent seasons.

Manchester United's 1-2 loss there in the second round in 2004 was arguably the key match in Porto's successful campaign that season.

Mourinho himself suffered defeat by the same margin, when he took Chelsea there in the group stages the following season, his first in London.

Arsenal fared only marginally better this season, registering a goalless draw in December to ensure that both sides progressed to the knockout stage.

Mourinho and his former Porto players, Carvalho and Paulo Ferreira, might be hoping that some of the animosity associated with their departure has dissipated.

The manager, however, is resigned to the fact that for a section of the Porto supporters, his decision to move on to a new challenge will never be one they can understand or accept.

'Those people will give me some nice songs like sometimes I have in England,' he said.

'That's part of the job. I know the job I did there, I know the history I did in that club and not even whistles or boos can delete the history.'

Chelsea will be encouraged by the return of Michael Ballack from the thigh injury he suffered on international duty earlier in the month.

Mourinho will have to reshuffle his defence once more, having lost Khalid Boulahrouz for several weeks with a dislocated shoulder.

'The message I want to give to my players is that they have to be more worried about us than we are about them,' he said.

Porto welcome back winger Ricardo Quaresma from a two-match ban.

Coach Jesualdo Ferreira is set to revert to a 4-3-3 formation, with Argentinian strikers Lucho Gonzalez and Lisandro Lopez looking to profit from Quaresma's crossing ability.

AGENCE FRANCE-PRESSE

FC Porto v Chelsea
Live, Ch24, tomorrow, 3.30am

US housing starts hit 10-year low

WASHINGTON - HOME builders in the United States started work on the fewest number of new houses since August 1997 as a glut of unsold homes discouraged new projects.

Housing starts slumped 14.3 per cent to an annual pace of 1.408 million, less than forecast and down from December's 1.643 million rate, the US Commerce Department said yesterday. Building permits declined 2.8 per cent to a 1.568 million pace.

The figures show that even as sales rebounded, residential construction will remain a drag on the economy until the inventory of unsold homes declines.

Federal Reserve chairman Ben Bernanke told lawmakers this week that the process may extend through much of the year.

'Housing inventories are still beyond bloated, and starts aren't going to recover in any meaningful way until those inventories come down,' said chief economist Chris Low at FTN Financial. 'I would be cautious about calling an end to the housing slump just yet.'

Forecasts of starts ranged from 1.5 million to 1.72 million. Permits were expected to drop to 1.59 million, according to the median estimate.

Construction of single-family homes dropped 11.2 per cent last month to a 1.108 million rate, also the weakest since August 1997, yesterday's report showed. Work on multi-family homes, such as townhouses and apartment buildings, declined 24.1 per cent to an annual rate of 300,000.

Construction in the West fell 28.5 per cent to an annual rate of 301,000 last month, the slowest since December 1996. The decline in the West from December was the biggest since January 1979.

Starts also dropped 15.2 per cent in the Mid-west to a 195,000 pace, the weakest since January 1991, and decreased 11.8 per cent in the South to 716,000. Beginning construction in the North-east rose 8.9 per cent.

The number of homes under construction fell 2.4 per cent in January to a 1.218 million pace, yesterday's report showed. Housing completions declined 1.2 per cent to an annual rate of 1.88 million.

The number of housing units authorised, but not yet started, increased 2.9 per cent to 194,400.

BLOOMBERG NEWS

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