HEI’s earnings
fall 20.7 percent

By Russ Lynch
Star-Bulletin

An after-tax expense of $23.6 million from closing its money-losing residential real estate business cut third-quarter net profit at Hawaiian Electric Industries Inc. by 20.7 percent to $19.1 million, from $24.1 million in the 1997 quarter.

Per-share income was 59 cents in the latest quarter, down 22.4 percent from 76 cents in the year-earlier quarter.

HEI had an after-tax gain of $13.8 million in the latest quarter from on-going settlements with insurance carriers over a property and casualty insurance business that HEI used to own, Hawaiian Insurance & Guaranty Co. However, that wasn't near enough to cover the one-time write-off from last month's shutting of HEI's real estate subsidiary, Malama Pacific Corp., which had been hit hard by Hawaii's economic slump.

Earnings also were brought down by higher interest expenses, related to financing the company's acquisition of Bank of America's Hawaii operations, which were merged into HEI's American Savings Bank subsidiary.

Third-quarter operating profits were up for HEI's main businesses, electric utilities and the savings bank, but down for its "others" group, which includes the maritime operations of Hawaii Tug & Barge Inc. and Young Brothers Ltd.

Total corporate revenues for the latest quarter were $377.3 million, up 1.9 percent from $370.4 million in the year-earlier quarter.

Electric utility revenues of $259.7 million in the 1998 quarter were down 8 percent from $282.2 million in the 1997 quarter.

"Hawaii's poor economy and cooler weather have reduced (electricity) sales this year and caused us to revise our five-year sales forecast downward," said Robert F. Clarke, HEI chairman, president and chief executive officer.

The utilities trimmed costs, however, and the operating profit from that segment of HEI's business, $51.3 million, was up 6.7 percent from $48.1 million in the 1997 quarter.

"Our utilities have been working hard to keep costs down to offset a decline in sales," caused partly by the slow economy and partly by cooler weather this year which reduced dependency on air conditioning, Clarke said.

American Savings did well, helped by the added business from Bank of America, he said. The savings bank had an operating profit of $13.4 million in the latest quarter, up 13.6 percent from $11.8 million in the year-earlier period. Third-quarter revenues at American Savings were up 44.1 percent at $103.2 million, from $71.6 million.