Matson’s 1st quarter operating income drops 38%

Matson’s 1st quarter operating income drops 38%    Honolulu-based Alexander & Baldwin Inc., Wednesday reported that its U.S.-flag operator Matson Navigation’s first quarter operating profit dropped 38 percent to $18.3 million, from $29.7 million a year ago.
   Matson’s revenue for the quarter improved 6 percent to $219.3 million, compared to $206.2 million in the first quarter 2005.
   The operating income decrease 'was primarily the result of the termination of the APL Alliance, lower profitability in the Hawaii trade, and lower equity in the earnings of SSA Terminals,” A&B reported.
   A&B said its lower return from U.S. West Coast marine terminal SSA Terminals LLC of which Matson is a minority owner, “is primarily attributable to a year-end 2004 closing adjustment at SSAT that positively impacted Matson’s first quarter 2005 results.”
   The carrier’s Hawaii container volumes increased 1 percent to 41,800 units while its Hawaii automobile volumes were down 11 percent to 31,800 units. Matson’s Guam container volume declined 5 percent to 3,800 units.
   “Results for the Guam and China services have met expectations, with higher than anticipated volumes more than offsetting lower than planned yields. Revenue for the Guam and China services, however, was insufficient to offset decreases in revenue from the termination of the charter hire arrangement with APL and start up costs for the new services,” A&B reported.
   “Matson’s financial performance was negatively impacted by the previously disclosed termination of our alliance with APL. We expect the gap between the loss of APL-related earnings and earnings generated by our new Guam and China services to moderate toward the second half of the year,” A&B said.
   Matson Logistics’ operating profit soared 57 percent to $4.7 million from $3 million. Logistics revenue rose 13 percent to $108.4 million, compared to $96.1 million in the first quarter 2005.
   “Revenue and operating profit improvements were the result of improved yields in all business lines and increased customer volumes in the domestic, highway and expedited business lines, partially offset by lower international volumes,” A&B said.
   “The operating profit margin for the logistics services business was 4.3 percent in the first quarter of 2006, compared with 3.1 percent for the first quarter of 2005, due in part to the strategic shift toward the higher-margin highway brokerage business line.”
   A&B posted a consolidated net income for the first quarter of $37.4 million, slightly lower than $37.7 million in the same quarter last year. Consolidated revenue was also down slightly to $362.2 million from $364.6 million.
   A&B’s share price on the Nasdaq Stock Exchange closed Wednesday at $48.30, down 1.51 percent, or 74 cents, over the previous day’s closing price.