A&B reports 54% profit increase

By Andrew Gomes
Advertiser Staff Writer

The Honolulu-based diversified real estate, ocean transportation and food company earned $27.1 million, or 64 cents per share, compared with $17.6 million, or 43 cents per share in the same quarter last year, exceeding analyst estimates for earnings per share between 45 cents and 54 cents.

Revenue was up 26 percent, to $345 million from $273 million during the comparable periods.

Allen Doane, A&B president and chief executive officer, said performance for the first three months of the year has the company on track to increase earnings for the full year. "Results in the quarter were excellent," he said.

Leading the improvement were A&B real estate operations, while profits from subsidiary Matson Navigation Co. were in line with expectations, and income from sugar operations was up despite a drop in production.

Operating profit during the quarter from real estate sales and leasing was $28.5 million, up 41 percent from $20.2 million in the year-earlier period.

A&B said sales were unusually strong, and included 21 residential lots at the Wailea Golf Vistas on Maui for prices between $500,000 and $1.6 million. The company also sold 11 homes at its Kai Lani joint venture at Ko Olina on O'ahu.

Commercial property sales included a 71-acre parcel on Maui, nine lots at Mill Town Center on O'ahu, seven lots at Maui Business Park and 7 1/2 floors in the downtown Honolulu office high-rise Alakea Corporate Tower where floors are priced at about $1 million. A&B bought the 31-story building in March 2003, and sold 8 floors last year.

"A&B's real estate business had exceptional performance — the combination of our increased investments coinciding with favorable market conditions in Hawai'i," Doane said.

At Matson, ocean transportation operating profit was up 54 percent to $18.6 million in the quarter, over $12.1 million in the year-earlier period.

The profit gain — A&B said it does not expect profit to be as strong for Matson later this year —was primarily from improved cargo yields, several one-time vessel charters and higher expenses in the year-earlier quarter associated with West Coast longshore labor disruptions.

Matson said earlier this week it will raise rates for its Guam and Northern Mariana Islands service by $125 per container, effective June 6. It also will increase its West Coast terminal handling charge by $25 per container. The company said the rate increase is needed to offset operating costs and to support several investments.

First-quarter operating profit for A&B food operations, which include Hawaiian Commercial & Sugar Co. and Kauai Coffee Co., was $2.6 million, up 37 percent from $1.9 million in the year-ago quarter. A&B said the increase was likely a one-quarter event from higher sales of electrical power and specialty sugars. Sugar prices and production were down, resulting in a 10 percent revenue drop.

A&B stock closed up 85 cents at $32.92 yesterday after earnings were announced. The closing price was down from a 52-week high of $34.88 on March 1, and above the low of $29.85 on Nov. 20.

Advertiser Staff Writer Kelly Yamanouchi contributed to this report. Reach Andrew Gomes at agomes@honoluluadvertiser.com or 525-8065.