Here's why analysts are disappointed despite NOL's US$20m profit jump

Guess which volumes are worst affected.

According to DBS, NOL reported headline net profit of US$20m in 3Q13, compared to our expectations of about US$12m, but this includes about US$34m realized forex gains, and hence results are slightly worse than expected. Liner volumes were down 5% y-o-y, and interestingly 5% q-o-q as well, despite it being the traditional peak season.

Here's more from DBS: Intra-Asia volumes were the worst affected (down 12% q-o-q) as were Intra-Asia rates (down 7% q-o-q), possibly due to the cascading of capacity from the mainlanes. Asia-Europe rates recovered on average by 10% q-o-q as a result of the rate restoration programmes in June-July, and combined with NOL’s cost control measures, resulted in better operating performance compared to 2Q. However, profits are likely to be short-lived, as we explain below.