STAR-BULLETIN FILE
Matson Navigation Co. workers cleaned up after a container ship left. Net income at Matson's parent Alexander & Baldwin Inc. increased 54 percent in the first quarter to $27.1 million, the result of vigorous real estate activity and growth in Matson's shipping container volume.
A&B net rises 54%
Strong property sales and growth
in shipping container volume
helped boost first-quarter results
Alexander & Baldwin Inc.'s earnings jumped 54 percent in the first quarter as it reaped the dividends of Hawaii's booming real estate market.
The parent of Matson Navigation Co. said yesterday that net income jumped to $27.1 million, or 63 cents a share, from $17.6 million, or 42 cents a share, a year ago. Revenue grew 26.2 percent to $344.9 million from $273.4 million.
Allen Doane, president and chief executive officer of A&B, called the quarter "excellent" and singled out the company's real estate business. He said the performance of Matson, A&B's ocean transportation division, was in line with expectations.
"A&B's real estate business had exceptional performance -- the combination of our increased investments coinciding with favorable market conditions in Hawaii," Doane said.
Revenue in A&B's property development and management sales unit more than doubled to $40.1 million from $16.7 million a year ago, while operating profit grew 64 percent to $19 million from $11.6 million.
Doane attributed part of the growth to strong initial sales at Golf Vistas, A&B's first transaction at Wailea on Maui. A&B acquired all the undeveloped land at Wailea in October 2003.
Analyst Jamelah Leddy, who covers A&B for Seattle-based brokerage firm McAdams Wright Ragen, said the company's earnings per share and revenue exceeded her expectations of 49 cents a share and $325 million, respectively.
"It was primarily the growth in the sales of their land properties that was much better than I expected," said Leddy, who bases her property sales calculations on dividing the company's yearly projected growth in that area over four quarters.
"I'm a little surprised at the magnitude I was low," added Leddy, who was expecting real estate sales revenue of $23.4 million, nearly half of the actual total.
A&B's most prominent sales in the first quarter were seven lots at Maui Business Park, nine lots at Mill Town Center on Oahu, 7 1/2 floors of Alakea Corporate Tower in Honolulu and 21 resort residential lots at Wailea Golf Vistas.
A 71-acre parcel on Maui also was sold and there were 11 sales of homes at the Kai Lani joint venture on Oahu that closed out that project.
"The earnings are very positive because I think it indicates what the company can do in terms of future earnings power," Leddy said. "I think the one thing in the past that's held the stock trading in the low 20s to high 20s range was that Wall Street didn't necessarily believe there was a real earnings story.
"Over the last year and a half, a lot of acquisitions and joint ventures, particularly on the real estate side, demonstrates longer-term earnings growth."
Matson, A&B's largest revenue producer, posted a 6 percent revenue increase to $196.5 million from $186.1 million. Operating profit rose 54 percent to $18.6 million from $12.1 million.
"Container volume continued to grow, reflecting improved economic conditions in Hawaii," said Doane, noting that the first quarter is usually the weakest for Matson.
Doane said he doesn't expect Matson's year-to-year operating profit increases in the first quarter to be as significant in subsequent quarters. However, Doane said that profit margins should increase the rest of this year due to normal seasonality.
A&B's property development and management leasing unit increased operating profit 10 percent to $9.5 million from $8.6 million as revenue increased 9 percent to $20.8 million from $19.1 million. Occupancy on the mainland grew 7 percentage points to 94 percent and in Hawaii edged up 1 percentage point to 90 percent.
