Second quarter profits for Matson Inc. are down by nearly half from the same period last year as a result of a 2013 molasses spill and the company’s expansion to Alaska, the ocean cargo carrier reported.
Matson reported earning $9.9 million in the second quarter, down from $18.1 million in the same period last year.
Even with a decline in second quarter profits, consolidated revenue for the second quarter 2015 was $447.6 million compared with $436.4 million reported for the second quarter 2014.
Officials from Matson say its core businesses delivered strong results as a result of continued levels of demand for expedited China service, yield improvements in Hawaii and Guam, further improvements at SSAT and operating results from an Alaska acquisition.
“However, these favorable operational gains were offset by costs related to our Alaska acquisition and, more recently, the resolution of the molasses incident,” said Matt Cox, Matson president and CEO, in a statement.
The Honolulu-based company said the decline in profits was attributed to $13.5 million in expenses of the company’s acquisition of Horizon Lines, Inc., an Alaska-based shipping operation, and an $11.4 million molasses spill expense. About 233,000 gallons of molasses spilled from a Matson carrier and killed more than 26,000 fish and other marine life in Honolulu Harbor in September 2013.
Matson’s results for the second quarter of 2015 were negatively impacted by $13.5 million of additional selling, general and administrative expenses related to the Alaska acquisition, according to Matson reports.
Cox said the company’s Alaska integration is progressing as planned.
“We are on track to achieve our earnings and cash flow accretion expectations for this business within two years,” Cox said. “Looking ahead to the balance of 2015, we expect Ocean Transportation operating income to moderately exceed 2014 levels and we expect our core businesses to continue to generate significant cash flow to pay down debt, fund growth initiatives, including our new vessel investments, and return capital to shareholders.”
Matson expects to complete its integration of the Alaska operations within two years post-closing, at which point incremental run-rate selling, general and administrative expenses are expected to be about $15 million per year, or $3.8 million per quarter.
Effective January, Matson’s shipping rates for its Hawaii service were $225 per westbound container and $110 per eastbound container, a 5.4 percent increase from the prior year.
Matson also increased its shipping rates 5.5 percent in January 2014.