Matson has forecasted significantly less profit for the first quarter now that demand that was fuelled by the pandemic has gone away.
The US owner and operator of Jones Act container ships expects bottom-line earnings for the first three months of 2023 to range from $29.3m to $33.8m. That is a far cry from the $339m in profit that it earned during the same period last year.
The company expects earnings per share (EPS) for the quarter to range from $0.81 to $0.93. A year earlier, it posted EPS of $8.23.
“Despite being down from the extraordinary pandemic driven demand level over the last two years, Matson’s ocean transportation and logistics business segments performed well in a challenging business environment,” chief executive Matt Cox said.
“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.”
The liner operator expects operating income for its ocean transportation sector to come in at between $23m and $28m when it reports first-quarter earnings on 3 May, down from $416m in operating income for the first quarter of 2022.
Operating income for the logistics segment for the first quarter is expected to reach between $10m and $11m, compared to $16.4m in operating income recorded a year earlier.
“During the first quarter, retail customers continued to conservatively manage inventories amid weakening consumer demand, increasing interest rates and economic uncertainty,” Cox said.
“Currently in the transpacific marketplace, business conditions are mixed with general improvement in trade lane capacity and some improvement in retailer inventories, but we continue to see conservative management of inventories by retail customers in light of economic uncertainty.”
As a result, Matson expects its high-speed CLX and CLX+ container services from China to the US within the ocean transportation segment to see even less demand in the second quarter, Cox said.
“Absent an economic ‘hard landing’ in the US, we continue to expect improved trade dynamics in the second half of 2023 as the transpacific marketplace transitions to a more normalised level of demand,” he said.
“Regardless of the economic environment, 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.”
