STAR-BULLETIN / SEPTEMBER 2004 Matson's revenues jumped last quarter, though operating profit dropped because of one-time gains a year earlier. Above, the Matson container ship Maunawili approaches Honolulu Harbor.

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A&B’s earnings slip

The drop comes from 3 items
that boosted profits a year ago

Ocean shipper Matson Navigation Co. boosted its revenue 16 percent during the final three months of 2004, but parent company Alexander & Baldwin Inc.'s net income slipped 0.5 percent.

The fourth-quarter decline was due to three nonrecurring items that contributed to a big jump in earnings a year ago.

A&B, whose stock closed yesterday at an all-time high of $46.94, posted net income of $18.7 million, or 42 cents a share, compared with $18.8 million, or 44 cents a share, a year earlier. Revenue rose 20.6 percent to $394 million.

The company's net income fell primarily because of a one-time $16.7 million pension conversion settlement gain by Matson in the fourth quarter of 2003. The conversion to a multiemployer pension plan -- with two other marine terminal operators -- from a single-employer plan was the largest of the three items that together boosted Matson's operating profit by $10.7 million.

Matson's revenue last quarter jumped to $230.5 million from $199.3 million a year earlier while automobile volume rose 29 percent due to high shipments of autos to Hawaii for use in rental-car fleets. Container volume increased 8 percent. Matson operated two additional ships for most of the fourth quarter to help meet increased demand and to offset the effects of shoreside labor shortages in Southern California ports. Matson's operating profit fell 23 percent in the quarter to $25.3 million from $32.8 million.

For the year, A&B's net income grew 23.9 percent to $100.7 million, or $2.33 a share, from $81.3 million, or $1.94 a share. Revenue rose 21.6 percent to $1.5 billion.

"2004 results were outstanding, exceeding objectives that the company had established at the beginning of the year," said Allen Doane, president and chief executive of A&B.

"Even the fourth-quarter results exceeded our internal targets, thanks primarily to Matson Navigation Co. and its subsidiary, Matson Integrated Logistics," Doane added.

Doane said he expects A&B's results this year to improve over 2004 because Matson's Hawaii fleet is back to its normal eight-ship configuration and he expects the momentum in the Hawaii economy to continue. He also said the real estate market will continue to be favorable with sellers holding the upper hand.

"2005 will not be without its challenges, however," Doane said. "We expect increased competitive impact at Matson as new competitor capacity (from Pasha Hawaii Transport Lines) is brought into the Hawaii trade. In addition, we fully intend to maintain our real estate acquisition discipline, suggesting that it will be more difficult to find new investments with attractive returns in the near term."

The company also announced an acquisition and a sale involving two of its subsidiaries.

Matson Integrated Logistics, a unit of Matson Navigation, purchased Houston-based Aquitaine Assets Ltd., a freight transportation management and technology company, for an undisclosed price. And a unit of A&B Properties completed the sale of the Northwest Business Center, a three-building industrial complex in San Antonio, for $6.25 million.

The sale of the 7.8-acre San Antonio property, which has 87,000 square feet of leasable space and was acquired in 1998, was initiated after A&B was approached by the buyer, NWB One Investors Ltd.

A&B also declared a 22.5 cents-a-share dividend that will be payable March 3 to shareholders as of Feb. 18. A&B has kept its dividend, which yields 1.9 percent, at the same level for 29 straight quarters.

"An unsolicited but attractive offer was received for the Northwest Business Center, which prompted our business to sell," said Norbert Buelsing, A&B Properties' executive vice president.

Among A&B's other subsidiaries: