UPDATE 1-Horizon Lines Q3 profit beats Street

* Q3 adj shr $0.37 vs. est. $0.24 * Operating rev down about 13 pct

* Warns recovery will be slow, muted

Oct 23 (Reuters) - Container shipping company Horizon Lines Inc (HRZ.N) reported better-than-expected third-quarter earnings as lower costs helped offset the decline in shipping volumes.

The company said volumes were down 5.7 percent from last year, but noted that it was an improvement over the past three quarters and volume performance indicates that it might be coming off the bottom.

However, Horizon warned that it expects the recovery to be slow, muted and disparate.

Net income for the third quarter totalled $8.4 million, or 27 cents a share, down from $11.1 million, or 37 cents a share, reported last year. Excluding legal expenses and vessel impairment charges, adjusted profit was 37 cents a share for the quarter. Operating revenue fell about 13 percent to $308.0 million.

Analysts, on average, expected the company to report earnings of 24 cents a share on revenue of $294.4 million for the third-quarter, according to Thomson Reuters I/B/E/S.

For the fourth quarter, Horizon said it expects lingering economic weakness to continue to impact volumes to varying degrees across all of its tradelanes.

Shares of the Charlotte, North Carolina-based company were up more than 4 percent at $6.63 in morning trade on the New York Stock Exchange. (Reporting by Thyagaraju Adinarayan; Editing by Chakradhar Adusumilli)