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NOL considering sale or IPO of logistics unit

The shipping group stressed that such considerations are preliminary, and there is no assurance that a sale or IPO of APL Logistics will take place.

SINGAPORE: Neptune Orient Lines (NOL) said on Wednesday (Aug 20) it may sell or list its logistics business - APL Logistics - in order to improve its performance, but stressed that such considerations "are preliminary and exploratory in nature".

Following this statement by the shipping and logistics firm, shares of NOL jumped 4 per cent on Wednesday, to their highest in almost four months.

NOL says such considerations are preliminary and exploratory. It is however hoping to improve the strategic positioning and performance of its business.

"NOL wishes to state that it continually evaluates all available options to improve the strategic positioning and performance of its businesses. These include considerations of a potential sale or initial public offering (IPO) and listing of its logistics business as a separate, standalone unit from NOL," the shipping group said in a stock market filing.

"There is no assurance that any definitive transaction for the sale or an IPO of NOL's logistics business will be concluded," it added.

NOL issued the clarification following a Reuters report that said the firm was looking to sell its APL Logistics division in the hope of fetching more than US$750 million.

The shipping industry is struggling with overcapacity and depressed freight rates. NOL earlier this month posted a net loss of US$54 million (S$67.4 million) for the second quarter ended June, worsening from the net loss of US$35 million in the same period a year ago. APL Logistics, which had revenues of US$379 million during the quarter, lifted its core earnings before interest and tax (EBIT) by 40 per cent year-on-year to US$14 million.

Analysts say NOL can use the proceeds to pay down its debt and invest in long-term growth. Mr Yew Meng Hau, an investment analyst with Voyage Research, said: "NOL borrowings have increased significantly over the past few years, so it could be a potential method for them to cash out now and pad on their borrowings. Alternatively, it could be a way for them to continue to improve cost efficiency and focus purely on their container shipping business. We cannot rule out the possibility that NOL might use the proceeds from the disposal to acquire smaller players to build up its market share."

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