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A&B earnings Plunging profits at its Matson Navigation Co. subsidiary cut Alexander & Baldwin Inc.'s earnings by more than half in the first quarter, the company said yesterday.
drop 56%
Matson Navigation's plunging
» Matson, CSX hike fuel surcharge
profits drag down its parent
» BancWest reports higher earnings
» CBBI profit jumps 26%By Tim Ruel
truel@starbulletin.comOverall, A&B had net income of $9.8 million, or 24 cents a share, compared with $22.4 million, or 55 cents a share, in the first quarter of 2001. Overall revenue fell 15 percent to $234 million from $275 million.
Matson's operating profit dropped 86 percent to $2.5 million from $17.5 million in the first quarter of 2001, while revenues fell to $192.7 million from $196.6 million. Service container volume fell by 3 percent, while automobile volume dropped 23 percent.
In January, Matson dropped the service of one its West Coast-Hawaii vessels, decreasing its fleet to seven from eight. The company also deferred its usual February rate increase to April 14, when it raised general rates by 2.75 percent, a lower hike than the 3.5 percent increase in February 2001. Matson also blamed competitive losses.
"Matson's performance was very poor, due to the lingering effects of 9/11 on Hawaii's economy and internal operating shortfalls, principally at the Sand Island Terminal in Honolulu," said W. Allen Doane, A&B president and chief executive officer.In December, A&B had warned of weaker profits this year, stemming from Hawaii's economic downturn. More than 82 percent of the company's revenue comes from transporting products to the state, and it was expected that local businesses would need fewer goods this year as a result of the drop in tourism. In yesterday's statement, A&B said Hawaii should see improvement this year.
A&B's operating profit from food products fell to $2.1 million from $5.8 million the year-earlier. The previous year benefited from a one-time distribution of $5 million from a sugar transportation cooperative.
Profits from real estate sales were also down to $8.9 million from $12.2 million, while leasing profits fell to $8.2 million from $8.7 million. However, because of an accounting change, A&B's overall profits from property development and management fell 51 percent to $10.2 million from $20.7 million.
A&B is scheduled to hold an analysts' conference call today at 9 a.m. Hawaii time, to be broadcast live on its Web site, www.alexanderbaldwin.com.
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The two major carriers of ocean freight between the mainland and Hawaii are bumping up the cost of shipping goods to cover an increase in the price of fuel oil that powers their ships. Matson, CSX
hike fuel surchargeBy Russ Lynch
rlynch@starbulletin.comMatson Navigation Co. yesterday announced it will increase its fuel surcharge on May 5 to 4.75 percent on top of the regular freight bill. The fuel surcharge now is 3.25 percent.
CSX Lines, the former Sea-Land Service, said it posted the same increase earlier this week, ahead of Matson, but its change goes into effect April 28.
Both shipping lines had reduced their fuel surcharge last year, but Middle East events that have brought unrest to oil-producing countries have pushed up costs, they said.
Matson's senior vice president for ocean services, Paul E. Stevens, said that the recent jump in oil prices would justify an even greater increase but the company decided to hold the line at 1.5-point rise.
"For every dollar increase per barrel of bunker fuel, Matson experiences an approximate $1.6 million increase in annual operating costs," Stevens said.
The shipping lines say the fuel surcharge is directly connected to what they pay for fuel and it goes up or down depending on the oil markets. "Historically, Matson has adjusted its fuel surcharges up or down based on established trends in oil prices," Stevens said.
In November, the line decreased its surcharge to 3.25 percent, from 4.25 percent, when prices fell, he said.