Higher operating costs hold back earnings at American President

AMERICAN President Companies (APC) has reported net profit for the quarter to September 23 of US$22.5 million, down from $25.5 million for the same period last year.

Revenue for the third quarter was $672 million, down from $625 million last year.

Next income for the first three quarters was $51.7 million, down from $58.9 million for the same period last year.

Revenues for the first three quarters were $2 billion, up from $1.8 billion a year earlier.

Chairman John Lillie said third-quarter earnings had been affected by higher per-unit operating costs.

Vessel fuel cost per barrel increased 27 per cent in the quarter, compared with last year.

APC also incurred larger stevedoring expenses, which were impacted by higher labour rates in Asia and increased handling of China, west Asia and Southeast Asia cargo, along with an unfavourable currency exchange rate in Japan.

Also, costs related to corporate initiatives to improve the company's financial and order cycle processes were $5 million higher in the third quarter.

Partially offsetting the increased costs was a volume increase of 17 per cent in the firm's North America stack-train business.

This increased demand for APC's stack-train services reflects improved market conditions, competitor equipment shortages and additional capacity resulting from the company's acquisition of 1,000 containers in the first quarter of the year.

Also, the volume of the company's US import business increased six per cent in the third quarter.

The volume of the company's US export cargo declined five per cent, primarily a result of the previously announced loss of its position as preferred carrier of military dry cargo in the second quarter.

The decline was partially offset by higher revenue per unit in this market.

On the rest of the year, Mr Lillie said: 'We expect continued competitive pressure on US import and intra-Asia rates.' As of this June, the company was no longer the primary transpacific carrier of US military dry cargo, which was continuing to impact US export volume.

Operating costs were expected to be affected by the continued weakness of the US dollar against the Japanese yen, and relatively higher fuel costs.