Matson pulled in 22% less profit last year

Matson Inc. delivered more containers and automobiles to Hawaii in 2016, but the largest ocean cargo company serving the state had rough sailing in other areas, which resulted in a 22 percent profit decline last year.

The Honolulu-based firm, which also does business in China, Guam, Alaska and the South Pacific, reported Tuesday that its revenue rose by about $60 million to roughly $1.94 billion last year from $1.88 billion the year before.

Expenses, however, rose more. As a result, net income fell to $80.5 million last year from $103 million in 2015.

Matson’s profit in 2015 was a record, and was achieved despite incurring about $43 million in extraordinary expenses that year tied to a molasses spill in Honolulu Harbor and the purchase of Horizon Lines Inc. operations in Alaska.

Not having such big extraordinary expenses benefited Matson’s bottom line last year, but the company had other unusually high expenses that hurt income, including $85 million in maintenance costs that were 83 percent higher than they were in 2015, and $59 million spent on dry-docking that was about 125 percent more than what was spent the year before.

Other factors that dragged down Matson’s income last year included higher fuel costs that won’t be recouped through surcharges until this year, lower freight rates in China, and costs from putting more vessels into service during the first half of last year, the company said.

Matt Cox, Matson’s president and CEO, touted investments in four new ships that are on order and are expected to reduce operating expenses dramatically by 2020. But he also gave investors the news that operating income this year is expected to be lower than last year, partly because of continued higher-than-normal costs for anticipated maintenance and dry-docking work.

“For 2017, we expect to see modest improvement in each of our core businesses with the exception of Guam where we expect further competitive losses due to the launch of a competitor’s second ship,” he said in a statement. “As a result, we expect Matson’s 2017 operating income to be lower than it was in 2016.”

Matson’s container volume in Hawaii edged up by 0.6 percent to 160,200 last year from 159,200 the year before. The company also delivered 7.4 percent more automobiles in Hawaii — 75,200 last year compared with 70,000 the year before.

In China, volume slipped about 2 percent to 61,600 containers, but it surged in Alaska by 61 percent to 68,400 containers because last year was the first full year for Matson serving that state. The company took over operations there from Horizon in May 2015.

Matson’s financial report also included fourth-quarter results. The company’s profit in the last three months of 2016 was $19.4 million, down from $26.6 million in the same period the year before. Revenue totaled $519 million compared with $495 million.

The decrease in fourth-quarter profit was partly caused by rising prices in November and December for bunker fuel, which powers Matson’s ships. Cox said Matson aims to recoup such costs through fuel surcharges but gives a 30-day notice to customers before implementing surcharge increases. The most recent surcharge increase is slated to take effect next month.

Shares of Matson stock closed Tuesday on the New York Stock Exchange at $36.48 before the earnings report was released. Matson shares over the past 52 weeks have closed between a low of $31.03 on May 19 and a high of $42.04 on Sept. 2.