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Matson’s profit soared in fourth quarter


Feb 08, 2013
Matson’s profit soared in fourth quarter
Higher container volume in Guam contributed to $15.6 million in earnings for the shipping company
By Andrew Gomes

Matson Inc. lifted its profit in the fourth quarter to cap a strong year of earnings driven largely by higher shipping rates in China and a windfall of extra shipping volume in Guam. The Honolulu-based ocean cargo transportation firm reported Thursday that its fourth-quarter profit surged to $15.6 million from $1.6 million in the same period a year earlier. Profit for all of last year was $45.9 million, up from $34.2 million in 2011.

Revenue for the quarter totaled $398.3 million, up from $374.9 million a year earlier. Full-year revenue was $1.56 billion last year, up from $1.46 billion a year earlier. Matt Cox, company president and CEO, told stock analysts in a conference call that Matson’s earnings were solid yet satisfactory.

“I think we can do better,” he said.

Last year was historic for Matson, which celebrated its 130th anniversary and was spun off from parent Alexander & Baldwin Inc. on June 29. The fourth quarter was Matson’s second full quarter as an independent company. During the recent quarter, Matson’s biggest market for cargo — Hawaii — was roughly flat. The company shipped 35,100 containers, up 0.3 percent from 35,000 in the same quarter the year before. Automobile shipments declined 4.6 percent to 18,800 from 19,700.

Hawaii cargo volume stemmed from subdued construction activity, competitive rate pressure and shipments on other carriers from foreign countries, Matson reported, while auto shipments were affected by the timing of rental car replacement fleets.

Cox said he expects a modest gain in Hawaii shipping volumes this year driven by a small uptick in construction activity and growth in other areas of the local economy.

For Matson’s China service, cargo volume dropped 11.4 percent to 14,000 in the fourth quarter from 15,800 a year earlier, but strong rates led to earnings growth.

In Guam, container volume jumped 27.5 percent to 6,500 from 5,100 as Matson continued to benefit from a move by competitor Horizon Lines to pull out of the Guam trade in late 2011. Cox said he expects a new competitor will replace Horizon at some point, though there have been no hints as to when.

One area of weakness for Matson in the fourth quarter was its logistics service that deals with container movement on land. The company took a $3.9 million charge related to the value and leasing arrangements for a warehouse operation in California.

On another front, Matson bought ships and containers of the financially struggling New Zealand cargo carrier Reef Shipping for $9.6 million. The deal included four ships, roughly 1,500 pieces of container equipment and charter agreements for two additional ships used to serve about a dozen islands — including Fiji, Nauru, Tahiti and Samoa — mainly from New Zealand.

The acquisition isn’t anticipated to influence Matson earnings much, but gives the company a platform from which to further expand in the South Pacific.

“It is a small but important growth platform for us,” Cox said on the conference call.

Matson also spent money to pay down debt in the fourth quarter. The company extinguished $9.5 million in debt in the quarter and has paid down $54 million since splitting from A&B.

Shares of Matson stock closed Thursday at $26.34 before the earnings announcement. The price compares with a high of $28.08 on June 29, the first day of trading, and a low of $20.16 on Oct. 1.