China service gives A&B a boost
Alexander & Baldwin Inc. said yesterday strength in its new ocean-shipping service to Guam and China helped boost second-quarter net income 6 percent and that overall full-year earnings for the company should be higher than it expected.
Net income beat analysts' forecasts as it increased to $32 million, or 74 cents a share, from $30.2 million, or 68 cents a share, a year ago. Analysts were looking for 72 cents a share. Revenue gained 2.7 percent to $427.2 million from $416 million.
The Honolulu-based parent of Matson Navigation Co. said eastbound ships were nearly 100 percent full coming from the Chinese cities of Ningbo and Shanghai to Long Beach, Calif., and rates continued to improve heading into the peak shipping season. A&B said volume from China was up 84 percent from last year's ramp-up, and increased economic activity led to a 9 percent volume increase in its Guam service.
"Our Guam-China service has met its initial marketing, operating and financial objectives after five full quarters of service," said Allen Doane, chairman and chief executive of A&B.
A&B said its Hawaii service, however, was down from year-ago levels as container volume fell 5 percent due to the state's moderating economy and reduced shipments of lower-margin construction materials. Automobile volume was off 31 percent, due primarily to lower rental fleet turnover and slower retail auto sales.
A&B said opportunities for second-quarter cost-cutting initiatives involving Hawaii, such as maintaining service frequency but repositioning ships to take fuller cargo loads, will be limited in the second half of the year due to a rigorous dry-dock schedule.
Thus, A&B said, Matson is expected to have flat or marginally lower second-half earnings than a year ago.
Doane said A&B expects to achieve full-year targets by steady progress in its core businesses, including the sales of several commercial properties over the course of the next few quarters.
"What our past performance and our 2007 outlook show is that our multi-industry strategy provide the strong hedge against cyclicality in individual business segments, while additionally providing potential upside," Doane said.
Matson's operating profit jumped 60 percent last quarter to $39.1 million and its revenue rose 4 percent to $253.1 million while A&B's logistics services division saw operating profit rise 4 percent to $5.5 million and revenue drop 3 percent to $112.4 million.
The company said it expects accelerated real estate sales in the second half of the year after a slow first half in which operating profit, which includes joint venture earnings, fell 59 percent to $4.5 million and revenue totaled just $400,000 from $36.8 million a year ago.
In real estate leasing, A&B's operating profit edged up 1 percent to $12.3 million while its revenue rose 8 percent to $26.4 million.
A&B's agribusiness operating profit dropped 84 percent to $500,000 due to lower sugar prices and higher production costs while its revenue increased 2 percent in the quarter to $38.5 million.