A&B income down 19%
Advertiser Staff and New Services
Alexander & Baldwin Inc. yesterday reported third-quarter net income dropped 19 percent, largely because of a slowdown in its shipping business, and warned that the company's financial performance next year is unlikely to measure up to this year's.
The company also said it has implemented cost-savings measures governing payroll, capital expenditures and operating expenses to mitigate further drops in its shipping business and increased security costs stemming from the Sept. 11 terrorist attacks that have hurt Hawai'i's economy.
It also said it has made a decision at its shipping operation, Matson Navigation Co., that it will reduce its fleet of eight container ships serving Hawai'i by one later this year because of a drop in shipping demand.
A&B said net income for the quarter ended Sept. 30 was $17.3 million, or 42 cents a share, compared with $21.4 million, or 53 cents a share, in the same quarter last year.
Revenue dropped 8 percent, to $264.1 million, compared with $285.8 million the same time last year.
Operating profit for Matson fell 7 percent for the quarter as Hawai'i container and automobile cargo shipments were down 4 percent and 11 percent, respectively, compared to the same quarter a year ago.
Real estate business operating profit was off 36 percent, to $8.3 million in the quarter from $12.9 million in the year-ago quarter as stronger leasing activity was overshadowed by fewer property sales.
Food business operating profits were down 52 percent, to $1.4 million in the quarter, compared with $2.9 million in the year-ago quarter, because of poor performance at Hawaiian Commercial & Sugar Co. and Kauai Coffee Co. Inc.
W. Allen Doane, A&B president and chief executive officer, said third-quarter results reflected trends that had already started before Sept. 11.
"The slowing of the U.S. economy and Japan's continued struggle with its economy resulted in softening business conditions in Hawai'i and somewhat lower freight volume for Matson," he said.
Looking ahead to the fourth quarter and next year, Doane said A&B remains strong financially with low debt levels and the intent to continue growing its core businesses through acquisitions.
"Be assured that Alexander & Baldwin is responding aggressively to a changed business environment," he said.
Doane said the most important transaction remaining this year is BNP Paribas SA's purchase of remaining BancWest Corp. stock, including A&B's holdings in BancWest, a transaction expected to result in a per-share gain of $1.68 if it is completed in the fourth quarter as expected.
"In other respects, the fourth quarter will be difficult," Doane said, noting that the downturn in Hawai'i tourism has hurt cargo business and security costs have increased for the company.
The company has instituted a hiring freeze, is eliminating temporary employees, has suspended regular salary increases for senior managers, cut back on travel, and is being more cautious with capital investments.
The company has not had to reduce employee hours significantly. "We felt that our employees are our most imporant resource and we don't want to take actions to damage our people," Doane said.
Even though economic forecasters expect that the state's economy will be weak throughout next year, Doane said A&B will not stop investing in its future.
"If there are good opportunities out there, we're going to go after them," he said. "The bar may be higher than before, however."
For the first nine months of the year, the company said net income was $64.3 million, or $1.58 a share, compared with $76.0 million, or $1.85 a share, after an accounting change that resulted in a one-time, $12.3 million noncash increase to first quarter of last year. Excluding that change, income in the first nine months of this year was slightly higher than the year-ago period.
Revenue in the first nine months of this year was $834.1 million, down from $807.2 million the same time last year.