Stormy seas cut into Matson profit

Recent bad weather on the Pacific Ocean hurt business somewhat for Matson Inc., but Hawaii’s largest ocean cargo transportation firm still said its financial performance is off to a good start this year.

The Honolulu-based company on Wednesday reported a $12.5 million profit in the first quarter that was 12% lower than its $14.2 million profit in the same period last year.

Matson said it carried 2.2% fewer containers on its core Hawaii service as well as fewer containers on Alaska routes, which were offset by more container volume on routes serving China and Guam as well as a smaller group of routes covering Micronesia, South Pacific islands and Okinawa.

The decline in Hawaii container volume, which slipped to 34,900 units in the recent quarter from 35,700 a year earlier, was partly due to one fewer ship arrivals in the recent quarter because of sailing schedules. But another factor was stormy weather, which disrupted Matson’s sailing schedule and led to the deployment of an extra ship that cost millions of dollars in extra expenses.

“We faced difficult weather conditions in the quarter that impacted schedule integrity,” Matt Cox, Matson chairman and CEO, said in a conference call with stock analysts. “In my 33 years in the business, I haven’t seen storm activity like this that we had in our operating area in the Pacific.”

For the full year, Matson expects its Hawaii container volume to be on par with last year based on a stable competitive environment and small growth in the local economy that isn’t translating to more goods being shipped to the state.

“The container market environment in Hawaii is relatively flat,” Cox said on the call.

To sum up Matson’s overall business in the first quarter, Cox said: “I think we’re off to a good start for the year.”

Total revenue in the first quarter was up 4% to $532 million from $511 million a year earlier.

In China, Matson’s container volume surged 16% to 13,800 units in the first quarter from 11,900 units a year earlier, partly due to the timing of one more ship arrival. The company also said average freight rates for its China service were modestly higher in the recent quarter.

Another line of Matson’s business that did better was its logistics operation that includes coordinating ground transportation and storing cargo for customers. Operating income nearly doubled in this area to $8.1 million in the first quarter from $4.2 million a year earlier.

Shares of Matson stock closed at $38.10 on Wednesday before the earnings announcement. That was down from $38.51 on Tuesday and compared with a 52-week range of $30.92 on Dec. 24 and $41.18 on Nov. 16.

FIRST-QUARTER NET

$12.5 million

YEAR-AGO NET

$14.2 million