The container shipper is out $52.7 million in what an executive calls a "challenging" quarter
POSTED: 1:30 a.m. HST, Mar 4, 2011
After reaching a $45 million settlement for breaking federal antitrust laws, Horizon Lines Inc. recorded a loss of $52.7 million, or $1.71 per diluted share, in the fourth quarter.
By comparison, Hawaii's second-largest container shipping company made a profit of $1.3 million, or 4 cents per diluted share, in the fourth quarter of 2009.
The Charlotte, N.C.-based carrier, which agreed to plead guilty to price-fixing related to its Puerto Rico service, is paying a $45 million fine over five years and booked a $30 million charge against earnings for the fiscal year ended Dec. 26.
For the year, Horizon recorded a $54.5 million loss, or $1.77 per diluted share, compared with a loss of $31.3 million, or $1.03 per diluted share, in 2009.
"The fourth quarter turned out to be very challenging, due to lower-than-anticipated volumes in Hawaii, particularly in the latter months of the quarter, increased fuel prices, continuing rate pressures in Puerto Rico, and anticipated startup costs related to our new China service," said Brian Taylor, executive vice president and chief operating officer, in a statement.
Horizon generated $298.8 million in revenue in the quarter, up from $286.7 million in the year-earlier quarter. Annual revenue grew to $1.2 billion from $1.1 billion in 2009.
Excluding the settlement and other charges totaling $36.2 million after taxes, the fourth-quarter loss was $10.2 million, or 33 cents per diluted share. That compares to net gains of $3.9 million, or 12 cents per diluted share, after excluding antitrust legal expenses and other costs, a year earlier.
The annual net loss excluding one-time charges totaled $4 million, or 13 cents per diluted share, compared with a net gain of $19.1 million, or 62 cents per diluted share, in 2009.
In a conference call with investors yesterday, the company said lean inventories and slow construction activity resulted in lower-than-expected volume in the quarter. While tourism is recovering, improvement in other sectors such as construction and real estate takes time, Taylor told investors.
The company forecasts continued improvements in the tourism sector in 2011 and modest recovery in the other sectors, he said.
Taylor added that Horizon's military segment was stable during the recession and is expected to remain consistent this year.
"We're adopting a conservative assessment regarding the 2011 business outlook for this lane, at least until we start to see more evidence of an economic recovery really demonstrated in volume growth," he said. "As such, look for Hawaii to generate modest volume growth and a slight improvement in rate here in 2011."
The company said it accounts for about 37 percent of total U.S. marine container shipments from the mainland to Alaska, Puerto Rico and Hawaii, as well as Guam and Micronesia.