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Molasses spill, Horizon takeover halves Matson profit to US$9.9 million

HAWAII's Matson second quarter profits were cut in half to US$9.9 million because of two one-off expenses - the takeover of Horizon Lines' Alaska business and $11.4 million fines to settle a molasses spill in Honolulu Harbour in 2013.

Molasses spill, Horizon takeover halves Matson profit to US$9.9 million
07 August 2015 - 17:48

Molasses spill, Horizon takeover halves Matson profit to US$9.9 million

HAWAII's Matson second quarter profits were cut in half to US$9.9 million because of two one-off expenses - the takeover of Horizon Lines' Alaska business and $11.4 million fines to settle a molasses spill in Honolulu Harbour in 2013.

Quarterly revenue was up eight per cent to $346.7 million. This increase was due to the inclusion of revenue from the company's acquired Alaska operations for the period from May 29 to June 30, higher freight rates in the company's expedited China service and yield improvements in Hawaii and Guam, partially offset by lower fuel surcharge revenue, said a company statement. 

Hawaii container volume was 0.9 per cent lower during the quarter year on year as modest westbound market growth was more than offset by lower eastbound backhaul freight.

China volume was flat reflecting continued high utilisation and demand for Matson's premium expedited service; Guam volume declined by 4.8 per cent due to the timing of select shipments; and Hawaii automobile volume decreased 9.2 per cent primarily due to certain customer losses. 

Alaska volume was included in the company results for the first time and reflects operations from May 29 to June 30.

Ocean transportation operating income decreased $1.4 million during the second quarter year on year. 

The decrease was primarily due to $13.5 million of additional selling, general and administrative expenses related to the acquisition in excess of the company's incremental run-rate target, $11.4 million of costs related to the molasses settlement, and higher terminal handling expenses. 

Offsetting these unfavourable items were higher freight rates in China, yield improvements in Hawaii and Guam, the initial inclusion of operating results for the Alaska trade, and the timing of fuel surcharge collections. 

The company's SSAT terminal joint venture investment contributed $5.2 million during the second quarter 2015, compared to a $2.1 million contribution in the second quarter 2014. The increase was primarily attributable to the clearing of international carrier cargo backlog.

Matson president and CEO Matt Cox said the carrier's "core businesses delivered strong results in the second quarter". 

"In Alaska, we're off to a good start and our integration is progressing as planned," he said. "We are on track to achieve our earnings and cash flow accretion expectations for this business within two years."

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