A&B exceeds estimates with gains in shipping
The company's net was boosted by its real estate and shipping segments
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Alexander & Baldwin Inc. today beat analysts' earnings estimates for 2007 after it posted gains in its China and Guam shipping business and had a record operating profit in its real estate sales unit.
For the fourth quarter, net income rose to $36.4 million, up 35 percent from the year-earlier quarter, with revenue up 7.9 percent to $435.9 million -- despite an economy "that became more challenging as the year progressed," according to Allen Doane, chairman and chief executive.
The company also predicted "a choppier environment in 2008."
For the year, the company reported net income of $142.2 million, or $3.30 a diluted share, compared to $122.5 million last year. Analysts had forecast $3.17 a share, according to Thomson Financial.
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Alexander & Baldwin Inc., parent of ocean transport company Matson Navigation, said yesterday that profit for 2007 jumped 16 percent, boosted by both its real estate and growth in its China and Guam shipping business.
The company beat analysts' earnings expectations for the year with net income of $142.2 million, or $3.30 a diluted share, compared to last year, when profit fell 2.8 percent to $122.5 million.
Analysts had forecast $3.17 a share, according to Thomson Financial.
Revenue edged up 5 percent to $1.7 million in 2007, from $1.6 million a year earlier.
Allen Doane, chairman and chief executive of A&B, said the company surpassed internal goals "despite an economic environment that became more challenging as the year progressed."
"We ended the year with a diversified earnings base and a strong balance sheet, which will position us well for what is likely to be a choppier environment in 2008," he said. Doane later told analysts and investors later in a conference call that economic uncertainty may increase A&B's opportunistic investments.
He said during the call that he expects earnings of $3.40 to $3.60 a share for this year.
The Honolulu-based company also announced a stock buyback of up to 2 million of its common shares that adds to an existing share repurchase program expiring at the end of this year. Shares available for repurchase under that authorization total 205,968. The company has repurchased more than 1.1 million shares of stock since the beginning of the year at an average cost of $44.24.
Net income for the fourth quarter was $36.4 million, or 85 cents a fully diluted share, up 35 percent from $27 million, or 63 cents a share, in 2006.
Revenue was $435.9 million, compared with revenue of $404.1 million a year earlier.
Operating profit for the Matson division jumped 20 percent to $126.5 million from $105.6 million on higher China volume, which increased 57 percent in 2007 compared to 2006, when that service was still being ramped up.
In the quarter, Matson's operating profit increased $1.4 million, or 5 percent, to $30.1 million from $28.7 million a year ago. Revenue rose 9 percent to $262.3 million from $239.7 million.
Total Hawaii container volume dropped 3 percent for the year and 2 percent for the fourth quarter, reflecting a slowdown in the state's economy. China container volume edged up 2 percent in the quarter compared with the fourth quarter of 2006.
A&B's real estate leasing unit posted a record operating profit of $51.6 million for the year, up 3 percent from 2006, after it sustained a 97 percent average occupancy rate. Revenue rose 8 percent to $108.5 million. In the fourth quarter, operating profit dropped 10 percent to $12.1 million while revenue rose 3 percent to $27 million.
For the year, the real estate sales unit increased operating profit by 50 percent to $74.4 million in real estate sales, while revenue jumped 21 percent to $117.8 million. For the fourth quarter, operating profit more than doubled to $23.2 million from $10.5 million a year earlier, primarily as a result of property sales in Hawaii. Revenue jumped 2 percent to $32.4 million.
"The commercial markets in Hawaii are robust with vacancy levels at or near historic lows," Doane said on the call. "Our mainland properties are performing equally as well and provide a natural hedge to any Hawaii exposure we might encounter. We had modest currency impact from the sub-prime fallout with a few small mortgage company defaults or delinquencies."
The company's agribusiness segment had an operating loss of $6.7 million, or 97 percent, for the year, while revenue slipped 3 percent to $123.7 million. The company attributed the loss to lower raw bulk raw sugar sales volume and prices.
Agribusiness revenue for the fourth quarter decreased $1.6 million, or 5 percent, compared with the fourth quarter of 2006. Operating loss for the quarter was $700,000, compared with $3.3 million in the fourth quarter of 2006 to decreases in expenses related to reservoir repairs in 2007.