Matson Boosts Q2 Revenues, Operating income

Guam container volumes increased from 3,400 to 6,100

Pacific based ocean transport company Matson, Inc. (Matson) [NYSE:MATX] has announced a 4.5% increase in revenues to $394.2 million for its second quarter 2012 earnings ended June 30, 2012 compared to $377.4 million for the same period in 2011.

Operating income increased 11.3% to $32.5 million year over year, but net income fell some 58% to $7.8 million from $18.7 million in 2011 on the back of separation costs from its parent company, Alexander and Baldwin (A&B) on June 29, 2012.

Commenting on the quarter, President and Chief Executive Officer Matt Cox said the financial performance "continues to be mixed," with "weaker Hawaii freight volume more than offset by improved volume in Guam and improved freight rates in China."

Separation Costs

The Honolulu, Hawaii headquartered business said performance reflected the separation from A&B which resulted in $4.8 million in after-tax separation costs, a higher than expected 50% tax rate, and a net loss of $7.5 million from discontinued operations which includes prior A&B operations.

Ocean transportation revenues grew 9.2% quarter-on-quarter to $299.5 million, with operating profit increasing 15.1% to $31.2 million.

Matson said that was primarily due to increased traffic in the Guam trade lanes from 3,400 containers in the second quarter of 2011 to 6,100 in the period, an increase of 79.4% following the exit of competitor Horizon Line Inc. operating on the route.

Matson said it expects another carrier to eventually start operations on the route which would negatively impact its volume of business on the lane.

Revenues were also propped up by an increase in fuel surcharges reflecting higher fuel costs, and improved freight rates in the China trade lane.

The company's SSAT joint venture with marine and rail terminal operator Carrix, Inc's subsidiary SSA Ventures saw it added $1.6 million to the operating profit, down from $2.8 million in the same period last year due to a slide in container lift volume.

Wholly-owned subsidiary Matson Logistics saw revenues drop 8.1% in the period compared with last year due to a decrease in highway and warehousing volumes, discontinuation of its second China- Long Beach Express service (CLX2), and the loss of a major ocean carrier customer.

"The financial performance of our wholly-owned subsidiary, Matson Logistics, is beginning to improve but continues to perform below 2011 levels due primarily to our Northern California warehousing business," Cox said.

During the quarter, Matson said it also executed a new $375 million five-year unsecured revolving credit facility with a syndicate of banks.