Earnings rise 3% at A&B

By Andrew Gomes
Advertiser Staff Writer

Alexander & Baldwin Inc. reported yesterday that net income rose 3 percent to $17.8 million, or 43 cents a common share, during the three months ended Sept. 30, from $17.3 million, or 42 cents a share, in the same period last year.

Revenue was up 12 percent, to $294 million from $262 million in the respective quarters for the diversified ocean transportation, real estate and food products company.

Considering that only about three days of the 10-day port shutdown occurred during the third quarter, A&B warned that it is "highly unlikely" that the company's earnings growth trend will continue in the last three months of the year because of ongoing labor conflict at shipping terminals from California to Washington state.

"The near-term earnings performance of A&B will be heavily influenced by the pace and ultimate outcome of labor negotiations affecting Matson's operating costs, both in West Coast ports and in Hawai'i," Allen Doane, A&B's president and chief executive officer, said in a statement.

Doane said long wait times for port berths, below-normal dockworker productivity and container equipment tie-ups on the West Coast are hurting Matson, and he suggested that a rate increase might be an option to help the company offset losses.

John Kelley, vice president of investor relations and planning for A&B, said that Matson hasn't concluded whether an increase in rates would be necessary or sought if backlogs at the West Coast terminals persist or if dockworker negotiations lead to further disruptions in shipping.

"Going into the fourth quarter, we don't know what we're up against," he said. "We don't know what's going to take place or what the cost will be."

Typically Matson has tried to limit general rate increases, if necessary, to one per year.

The last increase for Matson's West Coast-Hawai'i service was a 2.75 percent hike in April. It was the company's lowest in three years. Earlier this week Matson increased its fuel surcharge to 6 percent because of rising fuel prices.

During the third quarter, Matson's operating profit dropped 24 percent, to $18.3 million from $24.2 million in the same quarter a year ago.

Container and automobile volumes were up 2 percent and 22 percent, respectively. But operating profits were dragged lower because of higher cargo handling and vessel operating costs as well as the sale of a subsidiary last year that increased year-ago operating profits.

Doane said A&B has concerns about near-term Matson earnings, but added that the ocean transportation firm is making good progress to contain costs and improve revenue, including better productivity at the company's recently transformed Sand Island terminal.

A&B's real estate business had a positive quarter, with operating profit from property leasing and sales up 31 percent to $10.9 million from $8.3 million in the year-ago quarter.

Operating profit also was up at A&B's food business, as higher production and prices for sugar and molasses led to an 118 percent increase to $4.8 million from $2.2 million in the year-ago quarter.

For the first nine months of the year, A&B had net income of $40.8 million, or $1 a common share, on revenue of $804 million, compared with net income of $64.3 million, or $1.58 a share, on revenue of $827 million during the first nine months of 2001.

Reach Andrew Gomes at 525-8065 or agomes@honoluluadvertiser.com.