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The Honolulu Advertiser
Posted on: Thursday, April 19, 2001

Earnings surpass A&B expectations

By Andrew Gomes
Advertiser Staff Writer

Alexander & Baldwin Inc. yesterday reported first-quarter earnings that exceeded its expectations, spurred by several real estate sales, strong leasing income and food division profits.

The Honolulu-based diversified company reported a first-quarter operating profit of $44.4 million, up 45 percent from $30.6 million in the same quarter a year ago.

Net income for the quarter was $22.4 million.

That was lower than the $26.4 million in the year-ago quarter, which was affected by a one-time earnings increase of $12.3 million due to an accounting change.

Excluding the change, first-quarter net income was up $8.3 million, or 58 percent, compared to a year ago.

On a per-share basis that included the accounting change, earnings were 55 cents during the just-ended quarter, compared to 63 cents in the year-ago quarter. The 55-cent performance easily beat analyst estimates of 40 cents a share.

A&B operates the ocean transportation business Matson Navigation Co. Inc., the real estate firm A&B Properties Inc., Hawaiian Commercial & Sugar Co. and Kauai Coffee Co.

Matson business was relatively flat on a year-over-year basis for the quarter. Container volume was up slightly and automobile volume relatively unchanged, which combined with lower return on investments and higher competition to result in a $2.4 million, or 12 percent, drop in operating profits to $17.5 million.

Real estate performance was bolstered by the sale of a Maui property to Wal-Mart and another transaction in Washington state. During the quarter, the company sold $43.1 million of property, compared to $3.1 million in the year-ago quarter. Leasing profits were up 22 percent.

Improved sugar prices and a one-time distribution helped generate a $5.1 million operating profit in A&B's food division, compared to $2.1 million in the year-ago quarter.

W. Allen Doane, A&B's president and chief executive officer, said results exceeded internal expectations. But he added that the company is guarded in its outlook for the rest of the year.

"During the first quarter, Hawai'i's economy continued to grow, benefiting from the momentum that began in 2000," he said. "The question is how long this good performance can last, with the U.S. economic outlook increasingly uncertain and Japan's economy stalled."

Reductions of imports from Asia, uncertain sugar prices and a possible downturn in the growth of real estate and tourism in Hawai'i would hit all of A&B's operations.

Already, the company's stock has reflected these concerns, according to Stewart Scharf, an analyst with Standard & Poor's in New York.

The company released its earnings after the close of trading yesterday. The price of A&B shares closed yesterday at $21.60, up 30 cents.

Since the beginning of the year, A&B stock has gradually fallen, and is down about 25 percent from a high of about $29 on Jan. 10.