Matson Q2 profit lower, but revenue increases
Matson said it had a profit of $18.1 million in the second quarter of 2014, compared with a $20.1-million profit in the same 2013 period. Total operating revenue was $436.4 million in the second quarter, compared with $416.6 million in the second quarter of 2013.
The company’s ocean transportation business had revenue of $321.1 million in the second quarter of 2014, a 3.6-percent increase over the same 2013 period, but the company had a 4.4-percent decrease in operating income to $32.8 million in the same period.
The company said that in the second quarter, "market growth returned to the Hawaii trade;
however, the company experienced modest competitive losses in eastbound
backhaul freight and Pacific Northwest-originated commodity freight.
For the second half 2014, the company expects growth in the Hawaii trade
to continue, with its Hawaii
volume expected to be flat-to-slightly up compared to the second half
It noted that Pasha is expected to launch a new ship that will have containership capacity
into the Hawaii
trade later this year, but is not expected to have any material impact on it this year.
Matson offers an eastbound service from China, and it said on that trade, "overcapacity is expected to continue, with vessel deliveries outpacing
demand growth. However, the company expects to maintain its volume and
average freight rates with high vessel utilization levels, as its
expedited service continues to realize a premium to market rates."
it said "muted growth is expected, and the company envisions its volume to be
modestly better than 2013, assuming no new competitors enter the market."
In its business between the West Coast and Hawaii, the company moved 34,800 containers in the second quarter, 2.5-percent fewer than in the same 2013 period, and 19,600 automobiles, 15.5-percent fewer.
Matt Cox said the company had parted ways with car customers that provided Matson with the least amount of operating margin and that the business had become more difficult to justify, but he said the company expects to be in the automobile business for the long term.
Matson’s logistics business had revenue of $115.3 million in the second quarter, an increase of 8.2 percent over the same 2013 period. Operating income for the logistics business was $2.9 million in the second quarter, a 31.8-percent increase over the same 2012 period.
Asked by a securities analyst if Matson might expand into the trade between the U.S. mainland and Alaska or other Jones Act trades, Cox said the company had determined that using surplus ships to enter the Alaska trade would not make money for Matson. But he added if the operations of one of the two companies in the Alaska trade today — Horizon and TOTE — were for sale, Matson would be a “willing buyer” as it would be “highly complementary” to Matson’s current business.
He said Matson is “very comfortable” with the Jones Act and would not shy away from other opportunities for investment in domestic shipping, though he noted some are far afield from what Matson does today, while others are more similar. He said there was no timetable for such investments, and they would have to be some rationale for such a deal.