Molasses Spill and Horizon Buy Take a Chunk of Matson’s Profit

Honolulu-headquartered carrier Matson, Inc., reported net income of USD 9.9 million for the quarter ended June 30, 2015, a 45% drop compared to USD 18.1 million net profit recorded in 2QFY14.

Matson says its second quarter results were negatively impacted by USD 13.5 million of additional selling, general and administrative expenses related to the acquisition of Horizon Lines, and USD 11.4 million of costs related to the company’s settlement with the State of Hawaii to resolve all claims arising from the discharge of molasses into Honolulu Harbor in September 2013.

Matson’s consolidated revenue for the second quarter 2015 was USD 447.6 million compared with USD 436.4 million reported for the second quarter 2014.

“Our core businesses delivered strong results in the second quarter, led by continued levels of exceptional demand for our premium expedited China service, yield improvements in Hawaii and Guam, further improvements at SSAT, and, for the first time, operating results from our Alaska acquisition,” said Matt Cox, Matson’s President and Chief Executive Officer.

”However, these favorable operational gains were offset by costs related to our Alaska acquisition and, more recently, the resolution of the molasses incident.”

For the second half 2015, the company expects market growth in the Hawaii trade to continue, with its Hawaii volume expected to be higher than the second half 2014. In the China trade, Matson expects to maintain its volume and average freight rates with high vessel utilization levels.

In Guam, stable economic activity is expected and the company envisions its volume to be modestly better than 2014, assuming no new competitors enter the market. For the second half 2015, Matson expects Alaska container volume to approximate the 35,000 loads achieved by Horizon in the comparable period in 2014.

“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. Looking ahead to the balance of 2015, we expect Ocean Transportation operating income to moderately exceed 2014 levels and we expect our core businesses to continue to generate significant cash flow to pay down debt, fund growth initiatives, including our new vessel investments, and return capital to shareholders.”

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