Home » Hawai‘i’s Most Profitable Companies 2023
Business Hawaii News United States

Hawai‘i’s Most Profitable Companies 2023

In August, Hawaii Business Magazine published the 40th annual Top 250 list, which ranks companies and nonprofits based on gross revenue in 2022. Nearly every industry saw year-over-year gains, from an average of 93% among tourism companies and 60% in the energy sector to more modest gains of about 3% in health care and construction.

This complementary list reports on 2022 profits and losses for 65 of those companies. Most of the data is self-reported, but some is pulled from annual reports.

Shipping Remains Strong

At the top of the list again is Matson, a pandemic-era powerhouse that deftly expanded its capacity as demand for goods from China surged. Matson opened a second China-to-Long Beach, California, line in 2020 and a new service from China to Oakland, California, in 2021.

The expansion paid off. Matson reported $4.34 billion in gross revenue in 2022 and an unprecedented $1.06 billion in net profit – the largest amount ever reported in our Most Profitable Companies list.

But those outsized numbers are expected to fall in 2023. Rising inflation and interest rates cooled spending last year, and retailers cut back on inventory. Matson discontinued its newest line in the third quarter of 2022 as demand lagged on the China routes – a development that Chairman and CEO Matt Cox predicted a year ago when he told Hawaii Business Magazine that supply and demand would return to normal once the “supercycle” had ended.

By the close of 2022, Matson reported an 11.7% decrease in container volume on its China routes, and a 5.8% decrease in Hawai‘i service. Global container shipping rates also fell throughout the year, ending just slightly above pre-pandemic rates.

Despite the declines, Matson maintained its profit margin of about 24% in both 2022 and 2021. Much of the money was returned to investors, but last year more than half was funneled into a capital construction fund to purchase new fuel-efficient ships. Another $100 million payment went into the fund in February 2023, and the company pledged to add anticipated tax refunds to it as well.

“This remarkable generation of cash has allowed us to pre-fund nearly twothirds of our expected $1 billion in capital investments for the next generation of Matson vessels,” writes Cox in the company’s 2022 annual report.

In November 2022, Matson announced that it had commissioned the building of three new vessels. The cargo ships will operate on cleaner-burning liquified natural gas and will feature fuel-efficient hulls, both of which will help Matson meet its environmental goals of cutting greenhouse gas emissions by 40% by 2030, and reaching net zero by 2050.

In addition to the new vessels, which are expected to be delivered in 2026 and 2027, Matson plans to equip three of its 20 company-owned vessels to run on liquified natural gas. The LNG installations are expected to be completed in the next two years, according to the annual report, with more conversions possible in the future.

Hawaiian Airline Improves

At the bottom of the list for the third year in a row is Hawai‘i’s other global transportation company, and the anchor of its tourism industry, Hawaiian Airlines.

In good news, Hawaiian Airlines reported gross revenue of $2.64 billion in 2022, up 65% from the year before. The results reflect the resurgence of tourism: 9.2 million visitors arrived in the Islands in 2022 – a 36.5% increase from the year before, according to UHERO data.

But Hawaiian also reported a net loss of $240 million in 2022 as it continued its long financial recovery.

One of the pressures last year included higher fuel prices, which were largely triggered by the Russian invasion of Ukraine and the subsequent boycott of Russian crude oil. The average cost per gallon for the carrier’s aircraft fuel was $3.42 in 2022, up from $2.02 in 2021 and $1.52 in 2020, according to Hawaiian Airlines’ 2022 annual report. Fuel as a percentage of operating expenses went from 10.8% in 2020 to 28.7% in 2022.

Other pressure came from fierce competition. Southwest Airlines, which entered the Hawai‘i market in 2019, increased its interisland flights in 2022 and began offering $39 tickets, triggering a fare war with Hawaiian. While cheap tickets are great for passengers, Hawaiian took a financial hit in its effort to stay atop the interisland market.

But perhaps the biggest challenge in 2022 was the lack of visitors from Japan, once “a large percentage of our pre-pandemic international revenue,” according to the airline’s most recent annual report. Even as the Japanese government eased travel restrictions in the fall of 2022, visitors were hampered by a terrible exchange rate, which reached 150 yen to 1 U.S. dollar in October 2022; in January 2021, the rate was 103 to 1.

Hawaiian cut back its service to Japan, and kept some lines suspended. As of August 2023, the yen remained weak against the dollar, but Airline Weekly reported that Hawaiian’s bookings from Japan were finally accelerating.

To strengthen its bottom line, Hawaiian Airlines took a number of steps to improve service and diversify. In October 2022, the company announced it had entered an eight-year contract with Amazon to lease 10 Airbus A330-300 freighters and fly cargo for the retail giant. The service is expected to start this year or next.

The airline hired hundreds of new employees last year as it scaled up to pre-pandemic levels. And looking forward, Hawaiian Airlines has partnered with Par Hawaii to develop sustainable aviation fuel, and is working on all-electric “seagliders” for interisland travel with a Massachusetts company.

Local Banking is Healthy

The FDIC said U.S. banks reported a 5.8% decline in profits in 2022, but were still doing better financially than before the pandemic.

National results align with the data that banks and credit unions reported to Hawaii Business Magazine. All 11 financial institutions on the list enjoyed net profits in 2022, with an average gain of over 26%. Overall, profits in the sector declined by 4.7% in 2022 from the prior year, which was smaller than the national 5.8% decline.

Hawai‘i’s top-ranking financial institution is First Hawaiian Bank, which reported nearly $843 million in gross revenue last year and nearly $266 million in net income – a 31.5% profit margin.

In 2021, the bank reported more than $734 million in gross revenue and also about $266 million in net income – a 36.2% profit margin. In its 2022 annual report, First Hawaiian Bank announced that it finished the year with a record $14.1 billion in loans and leases, $21.7 billion in deposits and $24.6 billion in total assets.

Many Nonprofits Struggle

Near the bottom of this year’s list are some of Hawai‘i’s largest nonprofits that provide critical services to people in need.

Hawai‘i Foodbank, Catholic Charities Hawai‘i, Child & Family Service and Hale Kipa reported losses last year, the result of operating with far less revenue than during the height of the pandemic, when federal funding and charitable contributions were high.

In 2022, Hawai‘i Foodbank reported $17.7 million less gross revenue than in 2021, Catholic Charities Hawai‘i reported $14.8 million less and Child & Family Service reported $6.6 million less.

Source : HawaiiBusiness