A&B earnings down 34.3%


POSTED: Thursday, February 05, 2009

Strong property sales and increased efficiency at Alexander & Baldwin Inc.'s ocean shipping segment weren't enough to keep the company's fourth-quarter or full-year earnings from slumping.




Fourth-quarter net

        $23.9 million



Year-earlier net

        $36.4 million

Fourth-quarter profit for the Honolulu-based parent of Matson Navigation Co. was $23.9 million, or 58 cents a diluted share, down 34.3 percent from $36.4 million, or 85 cents a diluted share, a year earlier. That beat the average estimate of 52 cents a share from four analysts polled by Thomson Reuters.

Revenue for the quarter ended Dec. 31 was $400 million, down 7.6 percent from $433 million in 2007, the company reported before the market opened yesterday.

Net income for the full year was $132.4 million, or $3.19 a diluted share, down 6.9 percent from $142.2 million, or $3.30 a diluted share, in 2007. Revenue was $1.9 billion, down 12 percent from $1.7 billion in 2007.

Many of the markets served by Alexander & Baldwin experienced an economic slowdown last year, and the company's “;2009 earnings prospects have been diminished,”; Allen Doane, chairman and chief executive officer, said in a statement.

“;As a result, we will continue to take all necessary measures - cost containment and expense reduction, deferral of non-essential capital projects, preservation of cash, shoring up of our liquidity sources - to preserve our financial strength,”; he said.

Fourth-quarter operating profit for Matson, Hawaii's largest ocean shipper, fell 30 percent to $21.1 million from $30.1 million on lower container volume in all trade lanes. Revenue slumped 9 percent to $239.5 million from $262.3 million.

Cost-cutting efforts partially offset the impact of reduced volume, primarily in Hawaii, and higher maintenance and repair expenses, the company said.

Hawaii container volume fell 13 percent to 35,900 from 41,500, while isle automobile shipments fell by more than half to 15,300 from 33,200. Guam containers saw a 15 percent decrease to 3,300 from 3,900, while China container traffic fell 16 percent to 11,100 from 13,200, due to significantly lower Asian import demand.

For the full year, isle container shipments fell 9 percent to 152,700 from 167,500, while automobile shipments declined 22 percent to 86,300 from 110,100.

Full-year operating profit for Matson fell 16 percent to $105.8 million from $126.5 million a year ago. Revenue rose 2 percent to $1 billion on fuel surcharges and an improved cargo mix.

Fourth-quarter real estate sales operating profit was $19.3 million, down 17 percent from $23.2 million a year earlier, from joint venture sales at the company's Kai Malu joint venture in the fourth quarter of 2007. Revenue jumped 68 percent to $54.4 million from $32.4 million from the sales of the Venture Oaks office building in California and several parcels on Maui.

Real estate sales operating profit in 2008 was $95.6 million, 28 percent higher than $74.4 million a year ago. Revenue was $350.2 million, up nearly three times from $117.8 million in 2007.

In 2008, the company sold residential and commercial units at the Keola Lai high-rise development in Honolulu, two shopping centers and one office building on the mainland, as well as single-family homes at Kealaula on Kauai.

“;In the latter half of the year there was a significant drop in development sales activity as consumer demand for primary and resort residential units abated,”; Doane said.

The logistics services business had a 13 percent operating profit decline to $4.1 million from $4.7 million in the fourth quarter. Revenue totaled $99.8 million, down 7 percent from $107.8 million on a decline in intermodal revenue, which was partially offset by an increase in highway revenue.

For the year, operating profit declined 15 percent to $18.5 million from $21.8 million a year ago. Revenue rose 1 percent to $436 million from $433.5 million.

The company's agribusiness segment had an operating loss of $6.1 million for the quarter, compared to a loss of $700,000 a year ago. Revenue declined by 8 percent to $28.1 million from $30.7 million in 2007 on lower raw sugar, coffee and hydro-power sales, partially offset by an increase in sales of specialty sugars. Sugar production fell 11 percent to 30,400 tons from 34,000 tons.

For the full year, agribusiness had an operating loss of $12.9 million, compared to an operating profit of $200,000 a year earlier. Revenue increased to $124.3 million from $123.7 million a year earlier. Sugar production fell 12 percent to what Doane called a “;historically low”; 145,200 tons from 164,500 tons, the result of a two-year drought.

Fourth-quarter corporate expenses of $4.6 million were $3.2 million lower than a year ago. For the year, corporate expenses were $21.0 million, or $6.3 million lower 2007, due to lower performance-based incentive program expenses and cost cutting initiatives related to corporate overhead.

The company repurchased nearly 1.5 million shares of its common stock through open market purchases in 2008 and raised its dividend for the third straight year.

Alexander & Baldwin also said yesterday that it will extend its 2006 shelf agreement with Prudential Investment Management for an additional three years. The 2006 agreement provides for the issuance of up to $400 million in senior promissory notes and was due to expire in April.

The company also committed to a fourth of a series of senior promissory notes, totaling $100 million, carrying interest at an annual fixed rate of 6.9 percent.