Matson Inc. performed better in the first quarter than it projected two weeks ago but still saw its earnings plunge 90% primarily due to lower average freight rates and volume from its China operations.
The state’s largest ocean freight transportation company reported after the market closed Thursday that it earned $34 million, or 94 cents a share, in the January-March period, compared with $339.2 million, or $8.29 a share, in the year-earlier quarter. Volume from Hawaii, Alaska and Guam, as well as China, all declined from the year- earlier period.
Revenue decreased 39.5% to $704.8 million from $1.17 billion a year ago.
“Despite being down from the extraordinary pandemic driven demand level over the last two years, Matson’s Ocean Transportation and Logistics business segments performed well in a challenging business environment,” Chairman and CEO Matt Cox said in a statement.
Matson’s earnings topped its preliminary forecast announced April 19 when it projected that its first-quarter net income would come in at a range of $29.3 million to $33.8 million, and earnings per share would range from 81 to 93 cents a share. Analysts were looking for EPS of 76 cents a share.
Cox said he expects operating income in the second quarter to exceed the first quarter and then improve during the second half of this year.
“We expect Matson’s consolidated operating income in the second quarter of 2023 to be higher than the first quarter,” he said. “We expect normal seasonality to return to our domestic tradelanes and Logistics and our China service to experience freight demand levels below normalized conditions. In the near term, we expect continued economic growth in Alaska to be supportive of improved freight demand and in Hawaii and Guam we expect muted freight demand, but recognize the uncertainty in the macroeconomic environment.”
Cox said that during the first quarter retail customers continued to conservatively manage inventories amid weakening consumer demand, increasing interest rates and economic uncertainty.
He is more optimistic for the second half of this year.
“Absent an economic ‘hard landing’ (due to interest rate hikes) in the U.S., we continue to expect improved trade dynamics in the second half of 2023 as the Transpacific marketplace transitions to a more normalized level of demand,” Cox said. “Regardless of the economic environment, we expect to continue to earn a significant rate premium to the Shanghai Containerized Freight Index reflecting our fast and reliable ocean services and unmatched destination services.”
Matson said for the three months that ended March 31 that Hawaii container volume slipped 0.8%, primarily due to lower eastbound volume.
Alaska volume decreased 4.8% due to lower export seafood volume from the Alaska-Asia Express service, primarily due to three fewer sailings.
Guam volume fell 10.9%, primarily due to lower retail-related demand.
China volume fell 35.4% primarily due to lower demand for the company’s express services between China and Long Beach, Calif., and the discontinuation of its China-California Express (Shanghai-Long Beach-Oakland, Calif.) service in the third quarter.
Matson said its first- quarter operating income for ocean transportation operations fell 93.3% to $27.8 million from $416.2 million, and revenue fell 41.6% to $551 million from $943.9 million.
The company’s operating income for logistics, which includes coordinating ground transportation and storing cargo for customers, declined 33.5% to $10.9 million from $16.4 million, and revenue fell 30.6% to $153.8 million from $221.6 million.
Matson declared a dividend of 31 cents a share that will be payable June 1 to shareholders of record as of the close of business Thursday.
The company’s stock fell 89 cents to $63.42 Thursday before the earnings were announced.
FIRST-QUARTER NET
$34 million
YEAR-EARLIER NET
$339.2 million
