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Friday, October 24, 2003



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FL MORRIS / FMORRIS@STARBULLETIN.COM
The Matson container ship, Kauai, is seen getting unloaded at Honolulu Harbor. Container volume was up 4 percent last quarter.



Matson carries the freight
as A&B’s net jumps 21.9%

The shipping subsidiary posts a
49% increase in operating profits
while the parent company's
property units also excel


Alexander & Baldwin Inc. increased its third-quarter earnings by 21.9 percent as its biggest subsidiary, Matson Navigation Co., went full-ahead for the first time since the economic setback that followed the terrorist attacks of Sept. 11, 2001.


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A&B reported a net income of $21.7 million, or 52 cents a share, for the period ended Sept. 30, up from a net of $17.8 million, or 43 cents a share, in the third quarter of 2002. Companywide revenues of $316.7 million for the quarter were up 8.3 percent from $292.5 million a year earlier.

A&B did well with its property business, but Matson was the best performer, churning out a 49 percent year-over-year increase in shipping operating profits from a 6 percent increase in revenues. Sugar and other agricultural businesses showed declines in revenues, but remained profitable.

Also yesterday, the company announced a fourth-quarter dividend, unchanged at 22.5 cents a share.

"Third-quarter performance was strong, a reflection of excellent performance at both Matson and A&B Properties," said Allen Doane, president and chief executive officer. Together, shipping and properties make up about 90 percent of A&B's assets, Doane said. Agriculture was expected to lag and did so, he said.

In January, Matson added $200 per container to its freight rate for goods inbound from the mainland and $100 per container for goods heading from the islands to the West Coast. Its customers also are now paying a fuel surcharge of 7.5 percent on top of the freight rates, but Matson executives have said that just about covers higher prices for fuel and will be lowered whenever fuel costs fall.

Matson's ocean shipping showed an operating profit of $25.1 million in the latest quarter, up from $16.9 million in the year-earlier quarter. Matson's shipping revenues for the quarter were $191.6 million, up 6 percent from last year's $181.2 million.

In the period, Matson carried 41,300 containers in the Hawaii trade, up 4 percent from a year-earlier 39,900, but automobile volume slipped 8 percent to 29,900 from 32,400.

Doane said Matson's business is now strong enough to sustain the investment the business needs, including the $110 million cost for its first new vessel in more than a decade, the MV Manukai, which arrived in Honolulu Oct. 5 on its maiden voyage.

The company initially canceled its deal to buy the Manukai and an upcoming sister ship from a Philadelphia shipyard because the financing and operating costs did not seem to justify the purchase. John Kelley, A&B vice president for investor relations, said yesterday that the ships turned out to be a little less expensive than had been anticipated, interest rates turned out lower and so did operating costs.

A&B's property leasing business brought a third-quarter profit of $9.1 million, up 6 percent from $8.6 million a year earlier, after an 8 percent increase in revenues to $20.3 million, from $18.8 million.

Property sales profits were up 8 percent at $2.6 million, from $2.4 million, as revenues rose 42 percent to $10.4 million, from a year-earlier $7.3 million.

Doane said A&B is investing for future growth. He cited the company's recent purchase of 270 acres of developable land at the Wailea resort on Maui for $67 million, while a partner in the deal, Canada-based GolfBC Group, paid $68 million for three golf courses at Wailea, two golf courses on Kauai and an undeveloped hotel site at the Kauai Lagoons Resort.

A&B is also building a 100-unit residential high-rise in Waikiki and is a partner in the 247-unit Hokua luxury apartments in Kakaako.

The company also bought a 31-story office building in downtown Honolulu, now called Alakea Corporate Tower, which it is redeveloping for sale as condominium offices.

Food products profits dropped 92 percent, to $400,000 in the latest quarter from $4.9 million in the 2002 quarter, as food products revenues dropped 4 percent to $33.6 million from $35 million. A&B said raw-sugar production and sales were both down and costs for pensions, insurance and outside services increased.

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