Thursday, October 21, 1999

Matson unit helps
lift A&B net 34%

Property management also
helped bottom line

By Russ Lynch


A&B Strong business at its Matson Navigation Co. subsidiary and improved results from property management lifted Alexander & Baldwin Inc.'s third-quarter profit by 34 percent.

The parent company today reported a net of $18.5 million for the three months through Sept. 30, up from $13.8 million in the year-earlier quarter. Per-share income of 43 cents in the latest quarter was up 38.7 percent from 31 cents in the 1998 quarter.

Third-quarter total revenue of $244.9 million was down 25 percent from $326.4 million last year, due to the absence of revenue from California & Hawaiian Sugar Co. A&B sold its stake in C&H in December.

A&B reported a $21.9 million operating profit from Matson in the latest quarter, up 35 percent from what it called an "unusually low" $16.2 million operating profit from ocean transportation in the 1998 quarter. Matson's third-quarter earnings last year were its lowest for that period since its $14.1 million third-quarter profit in 1982, A&B said. All of the third quarters in between produced profits of more than $20 million and four of them had profits of more than $30 million.

In seeking to downplay Matson's latest results, A&B apparently was concerned about labor talks with Hawaii dockworkers. As one of Hawaii's two big containership operators, Matson is a major employer of dockworkers through its Matson Terminals Inc. stevedoring subsidiary. Leaders of Hawaii's roughly 500 dockworkers are threatening to call a strike and plan to return to the bargaining table Saturday.

Art "It is encouraging to see unit volume and revenue growth leading the continuing improvement of our ocean transportation results, following a difficult 1998," W. Allen Doane, A&B president and chief executive officer, said in the company's earnings announcement.

However, he said that with growth in demand for cargo movement growing at only a modest pace, Matson still faces challenges over its operating costs.

"Even with the West Coast labor negotiations behind us, longshore contract negotiations in Hawaii are presently in turmoil," Doane said. "This is a regrettable situation, given the fragile nature of the Hawaii economy."

Matson and other shipping companies settled with West Coast dockworkers in August, agreeing to wage increases averaging 8 percent over three years.

Matson is one of four stevedoring companies that is negotiating with Hawaii's dockworkers, who say they want parity with their West Coast counterparts.

Also contributing to improved business at Matson were the absence of a competing barge company that had some of the mainland-Hawaii cargo business last year and an increase in the volume of automobile shipments. Automobile volume was up 54 percent from the 1998 quarter and container volume was up 7 percent, the company said.

In the latest quarter A&B had an operating profit from property leasing of $6.6 million, up 13 percent from $5.8 million in the 1998 quarter, primarily due to income from newly acquired commercial buildings. The operating profit from property sales was unchanged at $1.6 million.

The operating profit from food products was $4.8 million in the latest quarter, down 37 percent from $7.6 million, mostly because of the absence of income from C&H.

A&B's stock, traded on the Nasdaq stock market, closed up $1 today to $23.62. The company's third-quarter income of 43 cents a share was 3 cents higher than the average forecast of two Wall Street analysts who follow the company.

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