Slower property sales hurt A&B
Alexander & Baldwin Inc. said today that net income fell 21.4 percent in the third quarter from the year-earlier period due to fewer property sales, the transition to its Guam and China ocean-shipping services, and an insurance gain from real estate operations that was recorded in 2005.
The results, though, blew past analysts' earnings forecasts by 12 cents and the shares jumped $1.35, or 3 percent, to $46.96 on the Nasdaq Stock Market today.
A&B posted earnings of $27.9 million, or 65 cents a share, compared with $35.5 million, or 81 cents a share, a year earlier. A survey of seven analysts by Thomson Financial had expected earnings per share of 53 cents, with a range of 46 cents to 60 cents.
Revenue slipped 6.2 percent to $422.9 million from $450.8 million.
"The third quarter was characterized by solid financial performance in an increasingly challenging environment," said Allen Doane, chairman and chief executive.
Doane, who said the lower net income was expected, nevertheless added "we are on track to exceed our original, full-year 2006 expectations."
A&B also said it will repurchase of up to 2 million shares of its common stock, adding to an existing plan under which it will have repurchased almost 1.7 million shares in 2006. The company also declared a dividend of 25 cents a share payable Dec. 7 to shareholders of record as of Nov. 9.
A&B said subsidiary Matson Navigation, which added the MV Maunalei to its fleet in the third quarter, saw its revenue rise 7 percent to $243.2 million but its operating profit slip 7 percent to $34.2 million.
The revenue gain was due to the start of the China service earlier this year, increases in fuel surcharge revenue, and improved yields and cargo mix. The China service is profitable, Doane said, but fuel and intermodal rail costs have cut into performance.
Hawaii container volume was down 2 percent from the third quarter of 2005, while Hawaii automobile volume was down 15 percent, primarily due to a reduction in auto manufacturer incentives for rental car fleet sales as well as competitive pressures.
It was a mixed picture for A&B's real estate units.
Occupancies above 97 percent enabled A&B's commercial real estate leasing division to post an operating profit of $12.5 million, up 10 percent, on revenue of $25.5 million, up 9 percent.
But the real estate sales division saw operating income plunge 92 percent to $1.2 million and revenue fall 92 percent to $5 million. Sales in the third quarter were up against year-earlier numbers that included sales of all units at the company's Lanikea residential high-rise in Waikiki, as well as a $5.2 million insurance payment.
Doane also said the first units at the Kukui‘ula development on Kauai have now begun to close but sales activity for the last quarter of this year will not meet original expectations.
In its food products division, A&B swung to an operating profit of $600,000 from an operating loss of $100,000 a year earlier while revenue rose 21 percent to $41.8 million due to higher sugar sales volume and prices, as well as higher power sales prices and growth in the equipment repair and trucking operations.