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Neptune Orient to pare expansion as profit slides

Neptune Orient to pare expansion as profit slides
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First Published: Thu, Aug 07 2008. 10 33 PM IST
Updated: Thu, Aug 07 2008. 10 33 PM IST
SinaSingapore-based Neptune Orient Lines Ltd, in talks to buy Hapag-Lloyd AG to become the world’s third largest container carrier, said it will pare expansion plans after profit declined 19%. The stock plunged.
Second quarter net income fell to $75.8 million (Rs318 crore) after the cost of fuel surged, the company said in a statement. Sales increased 24% to $2.24 billion.
Chief executive officer Ron Widdows said on Thursday the company will increase cargo box capacity by 9% this year against an earlier plan of 16% as global economies slow. Buying the German shipping line, valued by some analysts at $8.3 billion, could increase risks for the company as transportation fees decline worldwide.
“Neptune Orient will be adding more burden on itself should it go through with the acquisition,” said Ryu Je Hyun, an analyst at Mirae Asset Securities Co. in Hong Kong.
The firm declined 8.7% to Singapore $2.51 (Rs76)—the lowest value for the stock since 2 February 2007—in Singapore trading on Thursday.
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First Published: Thu, Aug 07 2008. 10 33 PM IST