Matson’s 1st-quarter operating income soars 60%
Matson Navigation increased its operating income 60 percent to $29.7 million in the first quarter thanks to higher U.S./Hawaii rates and volumes as well as an increased profit contribution from SSAT, its U.S. West Coast marine terminal joint venture with SSA Marine.
About half of the improvement at SSAT resulted from higher international import volumes and the balance from SSAT’s January fiscal yearend closing adjustments, said Alexander & Baldwin, the parent company of Matson.
Matson’s ocean transportation revenue increased 5 percent to $206.2 million in the first quarter, as its mainland/Hawaii Jones Act container traffic rose 4 percent to 41,300 containers. The carrier’s operating profit margin as a percentage of revenue climbed to 14 percent in the first quarter, from 9 percent a year earlier.
“The first quarter results were very strong,” said Allen Doane, president and chief executive officer of A&B, commenting on the parent company’s results. “The transportation segment benefited from a larger-than-expected contribution from our stevedoring joint venture, which resulted from increased volume in the West Coast ports; from continuing growth in our logistics services business; and from unit growth and yield improvements in the Hawaii service.”
Matson Logistics also saw much improved results and margins in the latest quarter, with operating profit rising threefold to $3 million from $1 million. Logistics revenue rose 30 percent to $96.1 million, from $74.1 million.
“Revenue and operating profit improvements were the result of increased customer volume and improved rates in all business lines,” A&B said. “Highway volume increased 30 percent and intermodal volume rose 7 percent.” The operating profit margin for the logistics services business was 3.1 percent in the first quarter of 2005, compared with 1.3 percent for the same quarter in 2004.
Buoyed by increasing profits from shipping, Matson said in February it will re-enter the China/U.S. West Coast container trade next year with a new service that would serve Hawaii, Guam and China before returning to the U.S. West Coast. The company will buy two U.S.-built containerships to do so.
But A&B said it remains cautionary in its outlook for profitability during the rest of this year, “especially about any tendency to extrapolate the pace of the first quarter improvement into expectations for the full-year.”