ONE’s net profit down by 94% in FY23

Singapore-based Ocean Network Express (ONE) has revealed a 94% profit drop in the fiscal year 2023, covering the period from April 2023 to March 2024.

This significant decline comes amidst a challenging landscape characterised by dynamic market forces and geopolitical uncertainties.

The net profit stood at US$974 million, indicating a year-on-year decline of US$14.02 billion. The liner major recorded a total revenue of US$14.5 billion for FY2023, a 50% decrease compared to the previous year.

ONE said the company’s business performance could be assigned to a number of factors, including sluggish cargo movements and persistent pressure from the supply side as new vessel deliveries continued. Nevertheless, rerouting via the Cape of Good Hope (CoGH) as uncertainty surrounding the situation in the Middle East continued, absorbed much of the surplus capacity resulting in a reversal of the oversupply situation.

As explained, the consumer spending remained strong in North America, however, lingering inflation was a drag in Europe, and cargo movements generally did not recover in earnest.

Amidst the overarching downtrend, there were sporadic instances of freight rate increases, particularly in the fourth quarter, fuelled by geopolitical uncertainties surrounding the Middle East.

For the fiscal year 2024, ONE anticipates a slight improvement in its financial performance. A profit forecast of around US$1 billion has been projected, indicating a marginal increase from the previous year. This cautious optimism is grounded in the expectation that the current economic and geopolitical environment will persist in the foreseeable future.

Specifically, some recovery in cargo volume is expected mainly in the US, but it is unlikely to be a full-fledged recovery due to geopolitical instability and ongoing inflation.

ONE estimates that due to the influx of the large number of new vessel deliveries supply will continue to exceed cargo demand. Meanwhile, the routing via the Cape of Good Hope is expected to have a significant impact on the supply-demand balance during the first half of the fiscal year, leading to high demand for vessel capacity. Given these circumstances, the current supply-demand balance is expected to continue.

“We will continue to monitor the situation carefully, focusing on maximising profit by flexible tonnage deployment and efficient equipment control based on demand,” said Jeremy Nixon, the CEO of Ocean Network Express.