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Alexander & Baldwin considers buyouts
The parent company of shipper Matson says it is seeking out small acquisitions
Alexander & Baldwin Inc., the parent of ocean transport company Matson Navigation, is looking to buy U.S. logistics companies, its finance chief said.
"We would anticipate continuing to do some small acquisitions and continuing to grow organically," Chief Financial Officer Christopher Benjamin said in an interview yesterday. He didn't identify possible targets.
The Honolulu-based company's Matson division, one of two U.S.-flag shipping lines, operates container ships primarily between the West Coast and Hawaii. It added service to China last year.
Alexander & Baldwin sees logistics and real estate as having the best growth potential, Benjamin said. The company, which gets about 9 percent of its revenue from property leases and sales, has made three real estate acquisitions since June with a total value of $51 million.
Matson benefits from a U.S. maritime law, known as the Jones Act, that prohibits foreign-owned ships from carrying freight between U.S. ports. As a result, only ships built and owned in the U.S., with American crews, can move goods between Hawaii and the U.S. mainland.
The company's new Chinese container traffic grew to 15 percent of its volume in the first quarter, almost six times more than a year earlier. In a bid to differentiate itself as a premium carrier, the Matson unit also introduced an on-time delivery guarantee for shipments from Asia.
"A year ago, it was like the Maytag repairman," Chief Executive Officer Allen Doane said in an interview. "It was very lonely in our first couple visits to China with ships that were pretty empty. A year later, our ships are virtually full."
Matson has no plans to add to its China capacity, which employs five ships on a continuous circuit between Long Beach, Calif., and China's ports of Ningbo and Shanghai.
Alexander & Baldwin earned 87 percent of its $385 million first-quarter revenue from transportation and logistics services. Profit fell by a third to $24.7 million, or 58 cents a share on weak real estate sales.
"We note that lumpy real estate sales cause quarterly results to vary sharply," Christopher Haley, a Baltimore-based analyst for Wachovia Securities, wrote in a May 1 report.
The week before reporting its earnings, the company raised its dividend 16 percent, to 29 cents a share.
Haley called the dividend boost "a positive indication" of "the company's ability to generate strong, consistent cash flows from both existing and new operations over an extended period of time."
The Bloomberg / Star-Bulletin Index is a price-weighted index designed to measure the performance of Hawaii-based companies. The index was developed with a base value of 100 as of December 31, 1999. A chart of the index which shows the weekly performance of its members is published weekly in the Honolulu Star-Bulletin.
SOURCE: BLOOMBERG NEWS / STAR-BULLETIN GRAPHIC