Horizon reports 2nd quarter loss
Horizon Lines reported a $7 million loss from continuing operations in the second quarter compared to a $4.1 million profit in the same 2010 period.
Revenue in the quarter ending June 26 was $307.5 million compared to $291.4 million in the year-earlier period.
The company said on an adjusted basis, it recorded a second-quarter net loss from continuing operations of $20.9 million, after a negative $13.9 million in adjustments. The adjusted net loss excludes a reversal of $18.2 million related to legal settlements.
The company said container volume for the 2011 second quarter totaled 75,208 loads, a 16.4 percent increase from 64,596 loads for the same period a year ago.
The volume growth was due to the company’s new China service, which began operating in December 2010. Excluding China, volume totaled 61,315 loads, a decrease of 2,908 loads or 4.5 percent from 64,223 loads a year ago. Relative to the 2010 second quarter, volumes were up in Alaska and Guam, and down in Puerto Rico and Hawaii.
Container rates, net of fuel, fell 7.9 percent to $2,989 from $3,246 a year ago. The reduction was due to the addition of China volume, with lower average and declining rates, and the continued pricing pressures in Puerto Rico. Excluding China, container rates, net of fuel, rose 0.7 percent to $3,278 in the second quarter from a year ago.
“Soft container rates in the transpacific market and high fuel prices pushed our second quarter financial performance significantly below last year’s,” said Stephen H. Fraser, president and chief executive officer. “Transpacific rates remained under pressure throughout most of the quarter, as some large international carriers continued to take aggressive rate actions amid capacity expansion in the trade lane. This excess capacity pressured overall volumes in June, resulting in further deterioration of spot rates and the postponement of peak-season surcharges. In addition, average fuel costs during the quarter were up 41 percent from a year ago.
“The start-up of a new transpacific service has coincided with one of the most challenging periods in the history of the trade lane,” Fraser said.
“Looking at our traditional domestic ocean shipping business, Alaska and Hawaii continued to demonstrate operating profitability during the second quarter, although higher fuel costs and volume declines in Puerto Rico and Hawaii negatively impacted results relative to a year ago,” he added.
“Rate pressures also persisted in Puerto Rico, due largely to overcapacity in the trade lane. In contrast, our operation in Alaska operated at near-full capacity utilization during the quarter and also continued to generate strong third-party terminal services revenue.
“During the quarter, we continued to focus on cost management and efficient customer service,” Fraser added. “We worked to preserve liquidity by significantly reducing operating costs, and we are continuing to move towards a comprehensive restructuring of our existing debt.”