Getting out of A big hit from chopping off its international operations, mainly a money-losing power generating business in the Philippines, caused Hawaiian Electric Industries Inc. to report a 67.7 percent drop in third-quarter earnings.
global power biz
costs HEI
Net income falls 67.7% as
overseas operations ceaseBy Russ Lynch
rlynch@starbulletin.com
The parent of Hawaiian Electric Co. and American Savings bank late yesterday reported a net profit of $7.1 million, down from a net of $22 million in the year-earlier period.
Because of a $20.8 million loss from discontinuing the overseas business, HEI did not report a net per-share result. Instead, the company said it earned 84 cents a share from continuing operations in the latest quarter, down from 95 cents a share in the year-earlier period. Discontinued operations brought a loss of 63 cents a share in the latest quarter, compared to a loss of 28 cents a share in the 2000 period.
HEI had operating revenues of $341.4 million in the latest quarter, up 2.3 percent from $333.7 million in the year-earlier period.
The company's operating profit from the electric utility business was up 1.9 percent at $54.3 million in the latest quarter, from $53.3 million in the third quarter of 2000. The American Savings Bank subsidiary, however, had a much higher increase, showing an operating profit for the third quarter of $19.5 million, up 19.5 percent from an operating profit of $17 million in the third quarter of 2000.
The trouble came from HEI's other operations, mostly the overseas power investments. That part of HEI's business had an operating loss of $4.8 million in the latest quarter, a 664.3 percent increase from a loss of $628,000 in the year-earlier three months, The loss was largely attributable to discontinuing the losing businesses.
"While we are pleased with our third-quarter results from our core businesses, the Sept. 11 attacks, as well as the ensuing responses, have greatly affected the people of Hawaii and will undoubtedly impact our operations," said Robert F. Clarke, HEI chairman, president and chief executive officer.
"Although results were down this quarter as compared to the same quarter in 2000, our core businesses, the utilities and bank, turned in solid results," Clarke said in the earnings statement issued late yesterday.
As of Sept. 30, HEI had ceased operating its international power business, something the company pushed in years past as a potentially big profit center.
In the 1990s, HEIattempted to spread its expertise around the Pacific and into Asia, predicting substantial returns from partnering with overseas power operations in places such as the Philippines. In the end, those plans turned sour and the company started racking up losses
"After evaluating strategic alternatives for our international operations, we believe it is in the best interest of our shareholders to exit this business and focus resources on our Hawaii operations," Clarke said.
Over the next year HEI will dispose of overseas assets.