Despite incurring additional costs for a settlement with Hawaii over a 2013 molasses spill and the acquisition of Horizon Lines’ Alaska operations, Matson’s core business “delivered strong results,” CEO Matt Cox said in a statement.
Matson, Inc. reported profits of $9.9 million in the second quarter ending June 30, 2015 compared with $18.1 million in the same 2014 period.
The container carrier, which now operates in the Hawaii and Alaska trades, said its bottom line was were negatively impacted by $13.5 million of additional selling, general and administrative expenses related to the company’s acquisition of Horizon Lines’ Alaska business and $11.4 million of costs related to a settlement with the state of Hawaii over a molasses spill in the Port of Honolulu in 2013 that occurred when a pipeline used for transferring the sugar syrup to ships broke. Matson will remove a tank farm and risers used to transfer molasses to ships at Sand Island Terminal per the terms of the settlement agreement.
Matt Cox, Matson’s president and chief executive officer, said the carrier’s “core businesses delivered strong results in the second quarter.” He said this was led by continued levels of “exceptional demand” for Matson’s premium expedited service from China to southern California, yield improvements in Hawaii and Guam, further improvements at SSAT (the company’s joint container terminal venture with SSA) and, for the first time, operating results from Horizon’s former Alaska operations.
“In Alaska, we’re off to a good start and our integration is progressing as planned,” said Cox. “We are on track to achieve our earnings and cash flow accretion expectations for this business within two years.”
Matson said it had modest westbound market growth in the second quarter, but continued to experience competitive losses in eastbound backhaul freight. For the second half 2015, the company expects market growth in the Hawaii trade to continue, and volumes to be higher than the second half 2014 as a result.
In the China trade, Matson said freight rates were higher in the second quarter 2015 than in the year earlier period, reflecting a continuation of rate gains made in the latter half of 2014. For the second half 2015, the company expects to maintain its volumes and average freight rates with high vessel utilization levels, as its expedited service continues to garner a sizable premium to market rates.
In Guam, Matson said stable economic activity is expected and the company envisions its volumes to be modestly better than 2014, assuming no new competitors enter the market.
Matson’s operating results for the second quarter 2015 included the operating results from Alaska for the period from May 29 to June 30, 2015. For the second half 2015, the company expects Alaska container volumes to approximate the 35,000 loads achieved by Horizon in the comparable period in 2014.
Matson Q2 profits hit by one-time expenses
