Matson’s 3rd-quarter shipping profit up 31%

Matson’s 3rd-quarter shipping profit up 31%    Matson's ocean transportation operating profit climbed 31 percent to $33 million in the third quarter from $25.1 million, as the U.S. Jones Act shipping line enjoyed higher volumes and rates.
   The carrier’s operating margin amounted to 15 percent of revenue in the latest quarter, up from 13 percent a year earlier.
   “Matson had a particularly strong third quarter, in spite of rapidly increasing fuel prices and operational difficulties associated with the widely reported labor shortage problems in Southern California,” said Allen Doane, president and chief executive officer of Alexander & Baldwin Inc., parent company of Matson Navigation and Matson Logistics.
   The improved profit from ocean transportation was due to several factors, including increased revenue, the absence of an excise tax accrual that took place in 2003, a gain on the sale of a minority interest in a Puerto Rico shipping investment, and lower administrative and employee benefit costs.
   “These positive factors were partially offset by higher fuel costs, higher vessel operating expenses and higher vessel depreciation due to the two new ship additions to the Matson fleet,” the company added.
   Ocean transportation revenue increased 12 percent in the third quarter to $215 million. This increase was due to higher Hawaii container and auto volumes, improved yields and cargo mix, and increases in the bunker fuel surcharge. Hawaii container volume was 6 percent higher than in the third quarter of 2003. Hawaii automobile volume was 8 percent, the first positive quarterly comparison of the year. The number of containers in Matson’s Guam service — a relatively small operation — was down 6 percent.
   Matson operated one additional ship for most of the third quarter and a second additional ship for part of September to help offset the effect of shoreside labor shortages in Southern California.
   In the third quarter, Matson Logistics raised its operating income 57 percent to $2.2 million from $1.4 million, and its revenue 64 percent to $99.5 million from $60.8 million. Strong growth in logistics revenue and operating profit for the third quarter and first nine months of 2004 in the logistics services business was mainly the result of increased customer volume. That increase was due both to an acquisition in late 2003 and unit growth in virtually all parts of the business — domestic, international, highway and air freight.
   Higher profits from shipping were the main factor behind the Alexander & Baldwin group’s improved results for the third quarter, when net income rose to $24.8 million from $21.7 million a year earlier.
   “Having earned $82 million over the first three quarters of 2004, we already have surpassed the $81.3 million achieved in all of 2003,” Doane said. “Alexander & Baldwin is having an outstanding year.”
   For the first nine months of the year, operating profit from Matson’s shipping business rose 37 percent to $83 million.
   Doane stressed that Matson’s results should be considered “in light of the substantial amount of capital we have committed to that business.” With the addition of two new ships to the Matson fleet in the past year, assets committed to the shipping business increased 40 percent. Matson spent $220 million on two U.S.-built containerships, the “Maunawili” and “Manukai,” now operating in its U.S./ mainland/Hawaii service.
   However, Matson warned of uncertain changes for its shipping business.
   “Matson will be experiencing increased challenges as we decide how best to provide service to Guam, where our current alliance agreement with APL expires in early 2006, and in preparing for the entry of an auto carrier competitor in Hawaii sometime in 2005,” Doane said.