Matson has provided an early look at third-quarter earnings that show profits slumping, but not as deeply as analysts had feared.
The Hawaii container liner operator said it expects to report $114m to nearly $121m in profits for the third quarter, well below the $266m in profit booked a year earlier. The slump is reflective of a container shipping sector that has continued to pull back from the record heights of the supply chain clogs and elevated demand during the pandemic.
But the New York-listed company said it expects diluted earnings per share to come in at $3.23 to $3.41, far better than the average analyst estimates. The three analysts tracked by Yahoo Finance expect the company to deliver $2.69 in EPS for the third quarter.
Matson chief executive Matt Cox said the company’s ocean transportation and logistics business continued to “perform well” during a challenging business environment and tough economic conditions for consumers.
The company’s ships carry cargoes on domestic trade lanes in the Pacific protected by the US Jones Act, in addition to its services to Guam. It also has transpacific services to China.
“Within ocean transportation, our China service experienced solid freight demand despite the muted peak season in the transpacific trade lane but generated lower year-over-year volume and freight rates, which were the primary contributors to the year-over-year decline in our consolidated operating income,” Cox said.
“Currently in the transpacific marketplace, we continue to see a reduction of deployed capacity in light of lower volumes as a result of lower consumer demand for retail goods.”
Matson said it expects its operating income in its core ocean transportation business to come in at $113m to $118m for the third quarter, which is a decline from the $315m booked in the same period of 2022.
Logistics operating income is estimated at $13m to $14m, down from $20m in the third quarter of last year.
Looking forward, Cox expects the current environment to continue.
“Absent an economic ‘hard landing’ in the US, we expect trade dynamics in 2024 to be comparable to 2023 as consumer-related spending activity is expected to remain stable,” he said.
“Regardless of the economic backdrop, we expect to continue to earn a significant rate premium to the Shanghai Containerized Freight Index reflecting our fast and reliable ocean services and unmatched destination services.”
