Matson’s net gets lift from Alaska, China volume

Matson Inc. rode some crests outside Hawaii to produce a bigger-than-expected profit in the third quarter, the Honolulu-based company announced Thursday.

Hawaii’s dominant ocean cargo transportation company earned $34.1 million in the three months ended Sept. 30, a 35 percent jump over its $25.3 million profit in the same period last year.

Revenue rose just 9 percent to $544 million in the recent quarter compared with $500 million a year earlier.

The gain in profit was driven by lines of Matson’s business outside the state, including China and Alaska. Meanwhile, cargo volume in Hawaii, which is Matson’s biggest trade lane, slumped.

“I feel good about the strength of our recent results and business performance,” Matt Cox, Matson chairman and CEO, said in a conference call with stock analysts. “Matson’s operating results outperformed our expectations.”

The company said its increased profit was largely the result of stronger demand for its premium service in China, more cargo from Alaska to the West Coast fueled by improved seafood harvests, and fuel surcharge collections.

A division of Matson that arranges ground transportation and other services also helped produce the larger third-quarter profit because the period included three months of operations from Matson’s freight bundling subsidiary, Span Alaska, compared with only two months last year. Matson bought Span Alaska in August 2016.

In Hawaii, Matson container volume declined 6 percent while automobile shipments slipped 2 percent.

Matson said the local container volume decline was primarily due to less construction-related material shipped to the state as fewer high-rise projects were ongoing compared with a year ago.

“Despite generally favorable underlying economic conditions and stable market share, our container volume contracted as a result of lower construction-­related cargo as the construction cycle on Oahu transitions from high-rise projects to the master-planned community developments in West Oahu,” Cox said.

Cox added that he’s is not overly concerned about the shift and its impact on Matson. “It’s a transition that happens,” he said, noting that construction is just getting started on the 3,500-home Koa Ridge community.

For the whole year, Matson expects that Hawaii container volume will be lower than last year.

One other market that declined for Matson in the third quarter was Guam, where a rival cargo carrier increased its frequency of service in December. Guam container volume for Matson was down 23 percent. That was offset somewhat by a 22 percent increase in container volume for other smaller markets Matson serves, including Micronesia, the South Pacific and Okinawa.

Shares of Matson stock on the New York Stock Exchange closed at $27.09 Thursday before the earnings announcement. That’s up from a 52-week low of $22.79 on Aug. 18 but far below the 52-week high of $41.65 reached nearly a year ago on Nov. 7.