Matson Sees "Positive Impact" from Lower Bunker Prices as Profits Soar

The Pacific shipping company reported a net income of $25 million for Q1 2015 compared with $3.4 million for Q1 2014.

Matt Cox, president and chief executive officer of Matson Inc. [NYSE:MATX] (Matson), on Monday credited lower bunker fuel prices for his company's strong first quarter 2015 financial results.

The Pacific shipping company reported a net income of $25 million for Q1 2015 compared with $3.4 million for Q1 2014.

Consolidated revenue for Q1 2015 was $398.2 million compared with $392.5 million for Q1 2014.

Joel Wine, senior vice president and chief financial officer for Matson, said that ocean transportation operating income increased $34.5 million during Q1 2015, compared with the first quarter 2014.

"The increase was primarily due to the timing of fuel surcharge collections, higher freight rates in China, and container yield improvements in Hawaii and Guam," the carrier noted.

Cox remarked that "lower bunker fuel prices positively impacted our results, primarily due to timing differences as fuel surcharge collections outpaced fuel expenditures."

He added that on a year-over-year basis, "the timing of fuel surcharge collections had a negative impact on results in the first quarter of 2014, so that timing difference is amplified in the current year period." 

Matson's Hawaii service saw container yield improvement and modest westbound market growth in Q1, but Cox said this growth "was largely offset by lower eastbound backhaul freight."

In Guam, Matson experienced a modest decrease in container volume during Q1, which the company attributes to the timing of select shipments.

Matson reported much higher freight rates in its China trade during Q1, reflecting the continued strong demand for its expedited transpacific service resulting in a 5.1 percent increase in container volume.

Cox said that for the rest of 2015, international vessel overcapacity is expected to continue, with new vessel deliveries outpacing demand growth. "Nonetheless, we expect strong demand for our expedited service to continue, resulting in high vessel utilization levels and average freight rates that are modestly higher than the good rates we achieved in 2014."

In January Matson announced that it would further reduce its bunker surcharge, lowering it by four percentage points on its Hawaii, Guam/CNMI, and Micronesia services.