Earnings drop for Hawaii’s 2nd-largest ocean shipper
Horizon Lines Inc. yesterday posted a 70 percent drop in first-quarter earnings, cut its earnings prediction for the full year, saying that strength in the Hawaii market couldn't offset weak Puerto Rico traffic and surging fuel prices.
Hawaii's second-largest ocean shipper saw its shares drop $3.38, or 23 percent, to $11.25 on the New York Stock Exchange, the biggest decline since September 2005, when the Charlotte, N.C.-based company first sold shares to the public. The stock is down 40 percent this year.
Horizon says it accounts for 38 percent of the shipments from the mainland to Hawaii, Alaska, Guam and Puerto Rico.
Charles Raymond, chairman, president and chief executive of Horizon, said Hawaii was "basically stable" and "doing well." But he said that fuel costs have risen "at unprecedented rates" and the Puerto Rican market is "somewhat softer" than anticipated.
"While we will clearly face some economic challenges in 2008, we are actively taking all measures we can to control our cost base," Raymond said.
Full-year earnings will be $1.30 to $1.69 a share, Horizon said, down from a February forecast of $2.01 to $2.26. Revenue may reach $1.35 billion, compared with an earlier prediction of $1.37 billion.
The company earned $2.1 million, or 7 cents per share, in the first quarter compared with $7.1 million, or 21 cents per share, in the year-ago quarter.
Revenue rose 12 percent to $305.9 million from $273.7 million a year earlier, with the 2000 acquisitions of Hawaii Stevedores and Aero Logistics combining to boost revenue an additional $10.1 million in the quarter.
Analysts were expecting a profit of 16 cents per share on revenue of $308.9 million, according to a poll by Thomson Financial.
Stephens Inc. Kevin Sterling analyst cut the stock to "equal weight" from "overweight." He halved his 12-month price target to $15 from $30.
"We continue to see management raise guidance, lower guidance, raise guidance, and lower guidance, and in our opinion, this calls into question management's visibility into its business," he said.
Sterling said the company's increasing debt is also a concern, as Horizon's vessels age and it seeks to buy new ones.
John Keenan, president of the company's shipping arm, Horizon Lines LLC, said Horizon is well-positioned in Hawaii with new equipment, flat racks, new refrigerated containers and its alignment with "the right customers."
Keenan said Horizon's Hawaii-Guam trade saw a 30 percent year-over-year improvement in on-time arrivals and schedule integrity due to the company's new TP1 vessels.