The company's first-quarter decline was also due to closing a ground transport unit
POSTED: 1:30 a.m. HST, Apr 30, 2011
Horizon Lines Inc. said its loss widened to $33.3 million in the first quarter from $11.7 million during the same period a year earlier because of host of factors, including a decline in shipping volumes on its Hawaii route and previously announced plans to discontinue its logistics business.
The second-largest ocean shipper serving Hawaii attributed $5.4 million of the loss to costs associated with closing its logistics business, legal fees and a debt modification plan. Excluding one-time charges, Horizon said it lost $28 million in the quarter, or 90 cents a share, compared with a loss of $28 million, or 34 cents a share, a year ago.
"As anticipated, the first quarter was very challenging," said Stephen Frazer, Horizon's president and chief executive officer.
In what is traditionally a soft quarter for the shipping business, Horizon also had to deal with the shutdown of its logistics operations, which primarily transports goods by ground, and the startup of its new China service, he said.
"These factors were further exacerbated by a steep decline in international rates, a sharp rise in fuel prices and the ongoing slow business conditions in Puerto Rico and Hawaii," Frazer said.
Compared with the first quarter of 2010, container volumes were up in Alaska and Guam, flat in Puerto Rico and down in Hawaii, according to Horizon.
The company said despite the decline in its Hawaii business, it was optimistic about the future.
"The company believes the steady military sector and continuing strength in tourism, even in the wake of the Japan disaster, could lead to modest volume growth as the year progresses."
Separately, Horizon Lines said Thursday that a federal court has reduced a criminal fine imposed on it for fixing shipping prices, easing concerns of a possible bankruptcy. The fine was reduced to $15 million from $45 million.
"The fine reduction … will facilitate our efforts to secure new long-term financing. We remain in constructive discussions as we continue to move forward with our refinancing efforts," Chief Financial Officer Michael Avara said in a statement.
The reduced fine is payable over five years without interest, Horizon said.
In February the company pleaded guilty to one felony count of fixing the price for shipping heavy equipment, medicine and other goods to Puerto Rico.
Horizon's shares closed down 37 cents at $1.77 yesterday on the New York Stock Exchange.