Horizon Lines 3Q Slides 24%; Shares Up As Earnings Beat Views
DOW JONES NEWSWIRES
Horizon Lines Inc. (HRZ) said third-quarter profit slid 24% as weak volume
continued to hurt the container shipping company, though earnings handily beat
Wall Street's expectations.
Shares jumped 8.5% premarket to $6.91. The stock was up about 83% this year
through Thursday.
Chairman and Chief Executive Chuck Raymond said the third quarter's 5.7%
volume drop was the best performance in a year. Still, he said Horizon Lines
faces a "challenging" fourth quarter, with lingering economic weakness
continuing to hurt volume across all of its trade lanes as well as in its
logistics business. He added it expects recovery to be "slow, muted and
disparate."
Horizon has been cutting costs as a consumer spending pullback hurts volume.
Moody's Investors Service in August lowered Horizon's ratings outlook to
negative, concerned that the company's liquidity could be further strained by
potential cash settlements of an ongoing U.S. Department of Justice antitrust
probe or pending class-action lawsuits related to its shipping services.
Third-quarter profit fell to $8.4 million, or 27 cents a share, from $11.1
million, or 37 cents a share, a year earlier. Excluding items such as antitrust-
suit and vessel write-downs in the latest quarter, earnings dropped to 37 cents
from 48 cents. Analysts surveyed by Thomson Reuters were expecting 24 cents.
Revenue fell 13% to $308 million as revenue per container, net of fuel, was
flat. More than half of the company's revenue decline was due to lower fuel
surcharges as fuel prices plunged from a year ago.
Looking ahead, Raymond reiterated that 2009 earnings before interest, taxes,
depreciation and amortization wouldn't fall enough to cause the company to
default on its credit agreement.
-By Mike Barris, Dow Jones Newswires; 212-416-2330; mike.barris@dowjones.com
(END) Dow Jones Newswires
10-23-090926ET
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