Hawaiian Electric profit slumps
The company still beats analysts' estimates if a charge is excluded
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Hawaiian Electric Industries Inc.
said yesterday a $35.6 million after-tax restructuring charge related to its banking unit, American Savings Bank, sent profit tumbling 71 percent in the second quarter.
HEI posted net income of $5.1 million, or 6 cents a share, compared to $17.5 million, or 21 cents a share, for the quarter ending June 30. Earnings were released after the market closed.
It is the fourth consecutive quarter the Honolulu-based company has outpaced analysts' estimates. Excluding the charge, earnings would have beat an average of three analysts' estimates, according to Thomson Financial.
Profit for HEI's electric utility operations jumped by more than one-and-a-half times in the quarter to $27.4 million from $10.7 million last year.
The company also said it will maintain its quarterly cash dividend of 31 cents a share, payable Sept. 10 to stockholders of record at the close of business Aug. 18. The dividend is equivalent to an annual rate of $1.24 a share.
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Hawaiian Electric Industries Inc. said yesterday its profit dropped 71 percent in the second quarter due to an after-tax charge related to its bank unit.
Second-quarter net:
$5.1 million
Year-earlier net:
$17.5 million
|
HEI posted net income of $5.1 million, or 6 cents a share, compared to $17.5 million, or 21 cents a share, for the quarter ending June 30. Earnings were released after the market closed.
Excluding the charge of $35.6 million, or 42 cents a share, from a balance sheet restructuring at American Savings Bank, profit would have been $40.7 million, or 48 cents a share. That figure would have beat an average of 41 cents a share estimated by three analysts from Thomson Financial.
Revenue rose 29 percent to $774.1 million from $600.8 million a year earlier.
"All areas of the company contributed to solid performance in the quarter," Constance Lau, president and chief executive officer, said in a statement. "Excluding the balance sheet restructuring charges, the bank's earnings and profitability improved quarter-over-quarter."
Profit for HEI's electric utility operations jumped by more than one-and-a-half times in the quarter to $27.4 million from $10.7 million last year. Utility revenue rose 40 percent to $688.1 million. HEI oversees Hawaiian Electric Co. on Oahu, Hawaii Electric Light Co. on the Big Island and Maui Electric Co. on Maui, Molokai and Lanai.
Kilowatt-hour sales slumped less than 1 percent to $2.5 million from last year as customers conserved energy and demand-side management programs more than offset the impact of warmer temperatures.
"We are seeing recovery from unusually low earnings a year ago when our utilities were awaiting rate increases to earn a return on reliability investments and recover higher operating costs," Lau said.
Operation and maintenance expenses were flat in the quarter at $83.4 million as higher expenses for customer efficiency programs and operations reliability were offset by lower maintenance expense from fewer unit overhauls and the timing of vegetation management costs.
Lau said she expects higher operation and maintenance expenses for the second half of the year from planned increases in production and transmission, and distribution maintenance work.
The utility also had a 3.3 percent increase in depreciation expenses to $35.4 million from 2007 plant additions.
American Savings Bank, the state's third-largest financial institution based on assets, had a loss of $18.1 million, compared to net income of $12.6 million a year ago. Results include the balance sheet restructuring charge, as well as a $1.2 million technology project write-off, a $2.6 million insurance recovery and a $600,000 gain on the sale of MasterCard stock.
Net interest income for the quarter was $52.6 million, compared to $51.1 million a year ago. The impact of lower interest expense due to lower rates on deposits and borrowings more than offset the decline in interest income from lower yields on assets and lower investment balances.
Net interest margin expanded to 3.39 percent from 3.20 percent last year.
The bank recorded a $1.15 million provision for loan losses, down from $1.2 million in the second quarter of 2007.
"The overall credit quality of the bank's loan portfolio remains good," Lau said. "However, we remain cautious and are actively monitoring our loan portfolios as there are signs that the local economy and real estate market are slowing."
Noninterest income dropped 91 percent to $1.5 million from $17 million, primarily due to an $18.3 million loss on the sale of securities, while noninterest expense rose 78 percent to $83.9 million from $47.2 million. Both were impacted by the balance sheet restructuring, technology project write-off, insurance recovery and MasterCard stock gain.
The holding and other companies' net losses were $4.2 million, compared to a loss of $5.7 million last year from lower interest and general and administrative expenses.
