Matson profits soar on U.S. tax reform

The Honolulu-based ocean carrier posted a net income of $232 million for the full year in 2017, an increase of more than 185 percent compared with the previous year, according to Matson’s most recent financial statements.    Matson, Inc. saw its earnings skyrocket more than 185 percent to $232 million for the full year in 2017, according to the company’s most recent financial statements.
   The Honolulu-based ocean carrier reported earnings per diluted share of $5.37 for the year, compared with $1.87 per diluted share in 2016, as revenues grew 5.4 percent year-over-year to $2.05 billion.
   The results were helped by a strong fourth quarter in which earnings jumped from $20.0 million ($0.46 per share) in 2016 to $166.9 million ($3.90 per share) in 2017 despite revenues slipping 0.6 percent to $516.1 million compared with Q4 2016.
   Matson attributed the earnings growth in large part to a $155.0 million ($3.59 per share) boost from one-time effects stemming from recently enacted tax reform legislation in the United States. The Tax and Jobs Act, which was signed into law by President Donald Trump in December, effectively cut the federal corporate tax rate from 35 percent to 21 percent.
   In Matson’s ocean transport segment, overall container volumes slid 3.2 percent to 315,200 FEUs in 2017, while automobile transport volumes fell 10.9 percent year-over-year to 67,000 units. The unit reported an operating income of $128,8 million, down 9.7 percent from 2016, despite a 2 percent uptick in revenues to $1.57 billion.
   In the fourth quarter, Hawaii container volumes fell 11.1 percent year-over-year to 36,900 FEUs despite modest growth in the Hawaiian economy, due primarily to lower volumes related to construction projects in Oahu, while box volumes to/from Alaska slid 10.1 percent to 14,300 FEUs.
   Chinese container volumes dropped 14.3 percent to 15,600 FEUs compared with the fourth quarter of 2016, largely due to an extra week in 2016, as well as volume gains associated with the bankruptcy of Hanjin Shipping during the period.
   In Guam, the company’s container volume in the fourth quarter also slipped 27.7 percent to 4,700 FEUs as a result of competitive losses to a U.S.-flag containership service that increased its service frequency to weekly in December 2016, said Matson.
   The company said it expects full year 2018 operating income in ocean transportation to remain relatively flat compared with 2017.
   Matson’s SSA Terminals (SSAT) joint venture investment contributed $28.2 million during the year, compared with a $15.8 million contribution the previous year, thanks primarily to improved lift volume.
   In Maton’s logistics unit, operating income jumped 73.1 percent year-over-year to $20.6 million in 2017, as revenues rose 18.6 percent to $475.1 million. The growth was primarily due to the inclusion of freight forwarding revenue from the company’s Span Alaska business, which it acquired in August 2016, as well as increased intermodal volumes and higher fuel surcharge revenue.
   “Matson’s core businesses performed well during the fourth quarter supported in particular by continued strong demand in our China service and higher lift volumes at SSAT,” Matt Cox, chairman and chief executive officer of Matson, said of the results. “Overall, 2017 was a solid year for Matson.
   “Operationally during the past year, we continued to advance our new Hawaii vessels and Sand Island crane program, which are expected to strengthen our market leading position and drive increased efficiency in the years ahead,” he added. “We look forward to the arrival of the first of our four new vessels in the third quarter of this year.”
   Looking ahead to this year, Cox said the company expects slightly lower volumes from China after an “exceptionally strong” 2017, as well as continued competitive pressure in Guam, which should be offset by “modest improvements” in the company’s other core markets.
   “As a result, we expect Matson’s 2018 operating income to approximate the level achieved in 2017,” he said.