A&B up in quarter, beats analysts’ prediction
Despite Hawaii's economic slowdown, Alexander & Baldwin Inc.
saw net income jump 70 percent in the first quarter of 2008.
The Honolulu-based firm, whose largest subsidiary is Matson Navigation Co., recorded earnings of $42.1 million, or $1.01 per diluted share, compared to $24.7 million, or 58 cents per diluted share, in the year-earlier period.
First quarter revenue was $582.1 million, up 52 percent from the $383.1 million posted in the 2007 first quarter.
A large number of sales at its Keola La'i residential condominium project in downtown Honolulu helped boost A&B's earnings in the quarter, despite rising fuel costs that resulted in 15 percent lower operating profits for Matson's ocean transportation division.
"We believe this is positive progress but expect additional residential contributions to be minimal later in 2008," said Goldman Sachs & Co. analysts Jonathan Habermann and Sloan Bohlen in a report dated March 20.
A&B's growth initiatives and company-wide cost containment efforts also helped its performance in the quarter, said W. Allen Doane, A&B's chairman and chief executive officer.
"We started the year with a strong first quarter," he said.
The earnings results beat analysts average estimates of 90 cents per share on revenue of $445.1 million in the quarter ending March 31, according to a poll by Thomson Financial.
Matson's ocean transportation division posted an operating profit of $15.9 million in the quarter, a 15 percent drop from $18.8 million in the year-earlier period.
Average bunker fuel costs increased 60 percent to $77.58 per barrel from $48.36 a year earlier. Revenue rose 5 percent to $243 million from $231.6 million.
Matson's higher revenues were attributed to fuel surcharges, favorable yields, and improved cargo mix.
Meanwhile, Matson Integrated Logistics recorded an operating profit of $4.7 million in the quarter, down 16 percent from the $5.6 million in the 2007 quarter.
Total revenue remained flat compared to the year-earlier quarter at $102.6 million.
The company's sugar operation recorded a $4.8 million in operating profit, a 33 percent increase from the $3.6 million a year earlier, as higher volume and prices were realized for power sales to local utilities.
Revenue rose 31 percent to $22.5 million from $17.2 million a year earlier.
A&B's corporate expenses of $5.7 million were $1.2 million, or 17 percent, lower than the first quarter of 2007 due to reduced long-term compensation liabilities and professional fees.
The real estate leasing division posted an operating profit of $13.9 million in the quarter, a drop of $1.1 million from a year earlier, primarily due to higher depreciation related to recent acquisitions and a slight decline in occupancy in its mainland portfolio.
Revenue remained flat from the 2007 quarter at $28.8 million.
A&B's total operating profit for real estate sales rose five times to $41.4 million from $8.8 million in the same quarter last year, as a result of the sale of 300 residential units at its Keola La'i condominium.
The company also saw increased earnings from joint ventures, including a residential development on Maui and Kauai and the sale of several buildings in Valencia, Calif.