Matson’s earnings have shrunk to a fraction of what they were a year ago, but the slump was less severe than the company’s own expectations and analyst estimates.
The New York-listed container ship owner and operator reported $34m in net income for the first quarter as its express services from China to California sustained a significant drop in demand from conservative retailers. The figure was about one-tenth of the $334m it made in profit during the same period last year.
But in April, the Hawaii company warned that it expected to post a loss of between $29.3m and $33.8m during the quarter.
First-quarter earnings per share (EPS) came in at $0.94, beating analyst consensus of $0.76 but falling well short of the $8.29 EPS posted at the same time frame in 2022.
This earnings drop is mostly because first-quarter revenue for Matson’s CLX and CLX+ high-speed lines from China to the Port of Long Beach dove to $551m, registering a 42% plummet from a year ago.
“Within ocean transportation, our China service 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,” chief executive Matt Cox said in a statement.
“During the first quarter, retail customers continued to conservatively manage inventories amid weakening consumer demand, increasing interest rates and economic uncertainty.”
The segment’s year-over-year operating income for the quarter shrivelled to $27.8m from $416m.
Matson achieved “a significant rate premium” over the Shanghai Containerized Freight Index during the first quarter, but rates were much lower than a year ago when shipping was benefiting from Covid-19-driven supply-chain disruption, he said.
“Currently in the transpacific marketplace, business conditions are mixed with general improvement in trade-lane capacity and retailer inventories, but we continue to see retail customers conservatively manage inventories in light of continued economic uncertainty,” he said.
Revenue for Matson’s logistics segment fell 31% from a year earlier to $154m for this year’s first quarter as a result of the owner having much less transpacific business between China and California.
The division’s operating income consequently decreased by a third from a year ago to $10.9m for the first quarter of 2023.
