May 07--Net income at Matson Inc. fell sharply in the first quarter as Hawaii's largest ocean cargo transportation firm worked through an extended trough in Hawaii container shipping that it expects is on the verge of improving.
The Honolulu-based company reported Tuesday that its profit for the first three months of the year dropped 63 percent to $3.4 million from $9.1 million in the same period last year.
Matson said the reduction was largely due to the timing of fuel surcharge collections, though other impacts included small declines in Hawaii and China container shipping volumes and $1 million in legal expenses dealing with a September molasses spill in Honolulu Harbor.
Matt Cox, Matson president and CEO, said in a conference call with stock analysts that he believes Hawaii container shipping is near the end of a trough that stretches back several years to the recession.
The expected improvement in Hawaii shipping is projected to help Matson generate full-year operating income that is roughly at or slightly higher than last year, Cox said.
"Our businesses are performing well," he said. "We continue to be optimistic about our operations and prospects."
Cox said that expected double-digit gains in Hawaii construction activity over the next two years driven largely by condominium tower development in urban Honolulu and the city's planned rail system on Oahu will benefit Matson.
"We are prepared for the opportunities that are ahead," he said.
In the first quarter the biggest impact to Matson's operating income, which declined 47 percent to $9.9 million from $18.7 million a year earlier, was a higher cost of fuel that Matson expects to recoup over the balance of the year through customer surcharges.
Hawaii container shipping during the quarter slipped 3 percent to 33,300 containers from 34,300 containers a year earlier and was largely due to reduced freight leaving the state, Cox said.
Matson also hauled fewer containers in its China service but said one additional ship trip in the first quarter last year was behind the 4 percent decline to 13,700 containers in the recent quarter from 14,200 containers a year ago.
The container volume declines in Hawaii and China were partially offset by Hawaii automobile shipments that rose 1 percent (200 vehicles), Guam container volume that rose 3 percent (200 containers) and Micronesia/South Pacific container volume that rose 33 percent (800 containers).
Matson also increased land-based cargo service revenue -- which includes warehousing and truck and train transportation connections - by 3 percent to $98 million in the first quarter from $95 million a year earlier.
Overall revenue for Matson dipped about 1 percent to $393 million in the first quarter from $395 million in the same quarter last year.
Shares of Matson stock closed down 69 cents Tuesday at $23.71 before the earnings announcement. Matson stock has ranged over the last 52 weeks between a high of $29.24 on Aug. 22 and a low of $22.97 on Feb. 3.
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