Matson can’t explain drop in cargo business

Matson Inc. had significantly lighter container loads and profit in the third quarter as business slumped in Hawaii, Alaska, China and Guam.

The Honolulu-based ocean cargo transportation firm reported Monday that its income fell 40 percent to $25 million in the July- September period from $41.5 million in the same quarter last year.

Revenue was off 8 percent at $500 million in the recent quarter compared with $544 million a year earlier.

The biggest drop in Matson’s business happened in Alaska as the result of energy and seafood industry challenges, though Hawaii cargo shipments experienced what the company described as a surprising lull that contributed to lower-than-expected profit.

“We couldn’t determine any reason for it,” Matt Cox, company president and CEO, said about the Hawaii cargo volume drop during a conference call with stock market analysts.

Matson’s Hawaii cargo volume declined 8 percent to the equivalent of 40,500 40-foot containers in the third quarter from 44,000 containers a year earlier. There also was a slight decrease in Hawaii automobile shipments to 17,700 vehicles in the recent quarter compared with 17,800 vehicles a year earlier.

Cox noted that much of the reduced Hawaii container business was due to the loss of what had been additional business the company picked up last year when competitor Pasha Hawaii Transport Lines had mechanical trouble with one ship at sea and reconfigured its service.

Still, Matson was surprised that Hawaii’s construction industry didn’t produce more cargo demand than it had been.

Cox said a broad sampling of customers didn’t shed light on the decrease, which he equated to an air pocket amid economic growth driven largely by a booming construction industry busy with high-rise condominiums and the city’s rail line.

“In Hawaii there was a lull in container volume following healthy market growth in the first half of the year,” he said on the conference call. “Despite this lull in market volumes, we continue to expect that the Hawaii economy is healthy and expect construction activity to support market growth in the future.”

Outside Hawaii, Matson had a bigger business decline in Alaska, where cargo volume fell 10.7 percent to 18,300 containers in the third quarter compared with 20,500 a year earlier.

Matson began serving that market from the West Coast last year when it purchased the Alaska operations of former competitor Horizon Lines Inc. Matson noted that its 2015 third-quarter profit was negatively affected by $10 million in expenses related to the Horizon acquisition that it hadn’t expected. The recent quarter was hurt by less cargo sent to Alaska for the energy industry and less seafood coming out of Alaska because of a much smaller salmon catch in Kodiak.

In China, Matson carried 16,300 containers in the third quarter, down 3 percent from 16,800 a year earlier.

Guam service declined 4.6 percent to 6,200 containers from 6,500 containers in the same comparable period. Matson said the modest drop on Guam was due to a competitor starting service in January and taking back some market share after Horizon quit serving Guam in 2011.

The only area of service where Matson had more business was in the Micronesia/South Pacific region, where the company delivered 2,700 containers in the third quarter, up 12.5 percent from 2,400 containers a year earlier.

Shares of Matson stock closed Monday before the earnings announcement at $41.65, about midway between 52-week high and low prices of $52.73 on Nov. 27 and $31.03 on May 19.