A&B earnings hit Alexander & Baldwin Inc. net income rose 3 percent in the third quarter but the company warned yesterday its prospects for the final three months of the year aren't as favorable due to the West Coast port lockout and ensuing cargo delays that have hit primary subsidiary Matson Navigation Co.
by port lockout
Its Matson subsidiary took a
$1.1 million hit in the third quarter;
the rest of the year looks worseBy Dave Segal
dsegal@starbulletin.com
"The near-term earnings performance of A&B will be heavily influenced by the pace and ultimate outcome of labor negotiations affecting Matson's operating costs, both in West Coast ports and in Hawaii," said Allen Doane, president and chief executive officer of A&B. "Presently, the Matson fleet serving Hawaii and Guam is fully operational, but schedule integrity has been impaired by long wait times to access berths at West Coast ports, and by below-normal terminal productivity on the West Coast."
Doane said A&B has taken "extraordinary measures" to assist Matson's customers in the movement of backlogged freight, including the use of an extra ship to service Hawaii. However, he said Matson's operations continue to be hampered by disruptions to the positioning of container equipment and the elimination of some West Coast port calls.
"All of these factors are having an immediate impact on the business, while the timing of recovery through increased rates is uncertain," Doane said. "It is therefore highly unlikely that Matson will be able to maintain its recent trend in quarter-by-quarter improvements in earnings in the fourth quarter."
A&B said overall earnings, which incurred a $1.1 million hit in the quarter due to the port situation, were $17.8 million, or 43 cents a share, compared with $17.3 million, or 42 cents a share, a year ago. Revenues increased 12.3 percent to $293.7 million from $261.7 million a year ago. The first of two dockworker lockouts, which lasted 36 hours, began Sept. 27 while the second, which went 10 days, ended Oct. 8 when President Bush imposed the Taft-Hartley Act to force the dockworkers and the shipping companies to resume operations.
"A&B experienced continued improvement in the quarter, as we had expected," Doane said. He said he was encouraged by Matson's results and said that A&B's real estate business was "solid." Moreover, he said commodity sugar price increases helped to boost income in food products, which is A&B's smallest division.
Matson's revenues rose 13 percent in the quarter to $234.8 million from $207.8 million a year ago largely because of its intermodal services business, which has lower profit margins than Matson's other businesses. But its operating profit fell 24 percent to $18.3 million from $24.2 million a year ago. Even though Hawaii container volume was 2 percent higher and automobile volume 22 percent higher than in 2001, operating profit decreased, primarily due to a one-time gain last year on the sale of a subsidiary, higher costs and higher outside transportation charges. They were partially offset by lower expenses from operating seven ships in the Hawaii trade for most of the third quarter compared with eight a year ago, and increased volume.
In A&B's property development and management division, the company said operating profit was off 1.1 percent to $8.6 million from $8.7 million, prior to excluding properties as discontinued operations. It also said property sales revenue was up 47.1 percent to $7.5 million from $5.1 million while operating profit from the property sales was $2.3 million compared with an operating loss of $400,000 a year ago.
The company's food products unit, benefiting from higher production volumes and higher prices for sugar and molasses, had an operating profit of $4.8 million that more than doubled the $2.2 million a year ago.