Matson loss drags down A&B earnings
Alexander & Baldwin, parent company of Matson Line, said it had first quarter profit of $5.2 million, less than one-third of the $17.3 million it earned in the first quarter of 2010.
Revenue was $405.6 million during the quarter, 18 percent more than the $343.1 million recorded in the first quarter of 2010.
A&B said it was able to make a profit despite an operating loss of $7.4 million at its ocean transportation business, Matson Line, which had turned a $10.4 million profit in the first quarter of 2010.
Stanley M. Kuriyama, A&B president and chief executive officer, noted the first quarter “traditionally is the weakest quarter in the year for shipping. The loss was attributable primarily to the precipitous rise in fuel prices, which outpaced Matson's ability to employ its fuel surcharge adjustment mechanisms to mitigate the impact, as well as start-up losses for our second China service, which was not in existence in the first quarter of last year.
“Performance from our real estate and agribusiness segments was, however, better than anticipated, helping us achieve overall profitability for the quarter,' he said.
Ocean transportation revenue was $269.6 million in the first quarter, 17 percent higher than $229.5 million in the same 2011 period.
A&B had expected start-up losses from its second China string, but they were “exacerbated by lower freight rates and volumes, due to increased overall capacity in the transpacific trade lane.”
The company said it believed it would “recoup a large percentage of fuel cost increases through surcharge mechanisms in 2011. Partially offsetting the negative factors mentioned above was an 8 percent increase in Hawaii container volumes, reflective, in part, of an improving Hawaii economy.”
The company’s logistics services business had revenue of $91.3 million in the quarter, an 18 percent increase over the $77.1 million in same 2010 period. Operating profit from the logistics business was lower, $1.5 million in the first quarter compared to $1.9 million in the first quarter of 2010.
The company said the increase “was principally the result of an increase in intermodal and highway volume, which increased 14 percent and 7 percent, respectively. Intermodal growth was driven primarily by increased U.S. inland activity resulting from ocean transportation's expanded China business. Highway volume increased due to an improvement in both full truckload and less-than-truckload business during the first quarter of 2011, partially offset by a large military project move in the prior year.”
