HEI profit rises 41.9%
Full-year results slip 3.4 percent
amid lower margins at the bank
and higher retirement costs
Hawaiian Electric Industries Inc. said yesterday that fourth-quarter profit jumped 41.9 percent to $37.4 million, or 99 cents a share, from $26.4 million, or 72 cents a share, a year earlier.
Although higher retirement plan costs at both its utility and bank subsidiaries and smaller profit margins at American Savings pressured earnings, the company performed well in 2003, said Robert F. Clarke, HEI chairman, president and chief executive officer.
"Net income for 2003 held steady compared with 2002 although the company was faced with significant earnings challenges," he said.
Fourth-quarter operating revenues rose 4.3 percent to $454.2 million from $435.7 million in the 2002 quarter.
For all of last year, HEI's net income slipped 3.4 percent to $114.2 million, or $3.05 a share, on revenues of $1.8 billion, compared to a net income for 2002 of $118.2 million, or $3.24 a share, on revenues of $1.7 billion. For continuing operations, HEI's net income was virtually flat with a year ago at $118.2 million, or $3.16 a share, compared with a $118.2 million, or $3.26 a share, a year ago.
During the fourth quarter, the company's electric utility business showed improvement and American Savings Bank held steady, Clarke said.
The company reported a fourth-quarter operating profit from its utility business of $22.3 million, up 9.6 percent from $20.4 million in the last quarter of 2002.
A 2.4 percent increase in kilowatt-hour sales at the utility for the year helped offset a $23.9 million increase in its retirement benefit expenses, Clarke said.
The company also took a charge of $3.1 million in the fourth quarter related to a settlement reached in December involving expansion of HEI's Keahole plant on the Big Island. And HEI reduced a previously recorded third-quarter charge of $1.8 million to $800,000 in the fourth quarter. The charge involved air pollution rule violations by two subsidiaries, Hawaiian Commercial & Sugar Co. and Maui Electric Co. The lower charge reflected a conditional settlement with the state Department of Health.
American Savings had net income in the fourth quarter of $14 million, up 4.3 percent from a year-earlier $13.4 million. At the bank, year-end earnings matched 2002's record earnings, despite margin compression, which squeezed net interest income by $3.8 million, Clarke said. American Savings' net interest margin, which reflects the difference of what a bank pays depositors and what it brings in from loans, improved to 3.16 percent from 3.12 percent in the quarter but for the year declined to 3.08 percent from 3.24 percent.
The bank posted net income of $56.3 million for 2003 as compared to $56.2 the year earlier.
American Savings' general and administrative expenses also were $8.4 million higher in 2003 due to increased costs of transforming from a traditional thrift to a full-service community bank, including hiring and training personnel in growing lines of business and increased retirement benefit expenses.
HEI also said yesterday it is maintaining its quarterly dividend at 62 cents a share, which would equate to a payout of $248 a year for an investor holding 100 shares. The next payout is March 10 to shareholders of record as of Feb. 11.
