Ocean carrier Matson’s third quarter results benefited from Horizon Line’s exit from the Alaska and Hawaii trades, according to the company’s most recent financial statements.
Matson, the domestic container carrier that provides liner service to Hawaii, Guam and Alaska as well as an eastbound service from China reported a profit of $41.5 million in the third quarter ending Sept. 30, nearly double the $21.5 million it earned in the same 2014 period.
Consolidated revenues for the third quarter 2015 stood at $544.3 million compared with $441.8 million reported for the third quarter of 2014.
“Third quarter results were strong, led by continued high demand for our expedited China service, a full quarter of our new Alaska business, volume improvements in Hawaii, and improved performance at SSAT (the company’s terminal joint venture with SSA) and logistics,” said Matt Cox, Matson’s president and chief executive officer.
On a year-over-year basis, Hawaii container volumes were up 14.8 percent in the third quarter of 2015; China volumes grew 2.7 percent, primarily the result of an additional sailing during the third quarter 2015; Guam volumes declined by 3.3 percent due to the timing of select shipments; and Hawaii automobile volumes decreased 8.2 percent.
In the Hawaii trade, Pasha took over Horizon Line’s former Hawaii Service. But Matson said it experienced volume gains and deployed additional vessels in response to a Pasha’s reconfiguring of Horizon’s services and vessel mechanical failure.
Cox said the integration of the former Horizon Lines Alaska business “continues to progress well and the business is on track to achieve our earnings and cash flow accretion expectations. Looking ahead, Matson is well-positioned to generate significant cash flow to pay down debt, fund growth initiatives, including our new vessel investments, and return capital to shareholders via both dividends and the share repurchase program announced today.”
The company expects integration of the Alaska business to be completed within two years after the deal to acquire the business was closed on May 29, 2015.
In the China trade, despite a continued decline in commodity freight rates for other ocean carriers, the company’s freight rates were higher in the third quarter 2015 than in the same period the prior year.
In Guam, stable economic activity is expected in the fourth quarter 2015. Matson noted on Aug. 29, the Navy said it would relocate approximately 5,000 U.S. Marines plus approximately 1,300 dependents from Okinawa to Guam by 2022 which is expected to result in higher freight demand to Guam during the relocation period.
Matson noted, however, that it will face increased competition in the Guam trade as APL has announced a new service to the U.S. territory. Matson said it “expects to experience some volume losses” after the APL service is launched.
Matson reports higher profits in Q3
