A&B's income fell 67% last year
by Andrew Gomes
Advertiser Staff Writer
Alexander & Baldwin Inc.'s net income took a big hit last year, though the drop in the fourth quarter wasn't as bad as earlier in the year.
The Honolulu company yesterday reported earning $44.2 million in 2009, a 67 percent decrease from $132.4 million in 2008. Revenue fell to $1.4 billion from $1.9 billion.
Most of last year's profit decline occurred during the first three quarters, when decreases ranged from 57 percent to 93 percent over the same quarters a year earlier. Fourth-quarter profit was down just 16 percent, to $20.1 million from $23.9 million.
Fourth-quarter results were aided by commercial real estate sales and an accounting change related to Hawaiian Commercial & Sugar Co., A&B's Maui sugar plantation subsidiary.
Weaker results were turned in by A&B's ocean transportation, real estate leasing and residential real estate development operations.
"The company's modest profit in 2009 was hard earned in a very difficult operating environment for all of our lines of business," said Stan Kuriyama, A&B president and CEO. "We believe the (fourth) quarter's results represent the first step in the right direction."
Kuriyama, who took over the chief executive post at A&B from W. Allen Doane on Jan. 1, said some of last year's economic challenges will persist this year, but that the company is better positioned for near-term earnings growth.
"The cost-cutting actions we took in 2008 and 2009, the investments we have continued to make in our businesses and the company's firm financial footing will position us well in 2010 as the markets we serve begin to recover," he said.
A&B said it has placed an emphasis on investing in Hawai'i real estate as part of pursuing opportunities for growth in all its core businesses.
In the fourth quarter, real estate sales produced the biggest operating profit for the company at $20.4 million, or 6 percent more than the same quarter the year before.
During the recent quarter A&B sold $64.2 million worth of property, including the Honolulu office building Pacific Guardian Tower, a California shopping center and several unimproved parcels on Maui.
For the full year, operating profit from real estate sales totaled $39.1 million, down 59 percent from the year before. In 2008, A&B benefitted from many home sales at its Keola La'i high-rise on O'ahu and its Keala'ula single-family home subdivision on Kaua'i. Last year, however, A&B sold just 18 residential units. A&B's biggest residential development project, the Kukui'ula luxury resort community planned for 1,200 homes on Kaua'i, recorded no house lot sales last year.
At Matson Navigation Co., A&B's ocean transportation unit, operating profit fell 36 percent during the fourth quarter to $13.5 million. Hawai'i container volume was down 5 percent, but Hawai'i automobile shipments were up 35 percent. Container volume for China and Guam also was up, 22 percent and 9 percent, respectively.
Matson's operating profit was reduced by $6.3 million because of a failed rudder on one of its ships, the MV Mokihana, which required putting a replacement ship into service while repairs were completed during the quarter.
For the full year, Matson's operating profit was down 45 percent, to $58.3 million.
Ground transportation services separate from Matson produced an operating profit of $1.2 million in the fourth quarter, down 71 percent from a year earlier. Full-year operating profit for the unit was down 64 percent to $6.7 million.
Real estate leasing was a more stable business for A&B in the fourth quarter and the full year. Operating profit in the quarter was $10 million, down 2 percent from a year earlier due to lower occupancy and rents, primarily at Mainland investment properties.
Full-year operating profit for real estate leasing was $43.2 million, down 10 percent from the year before. Average occupancy at A&B's Mainland properties fell to 85 percent last year from 95 percent the year before, while occupancy for A&B's local property portfolio dipped to 95 percent from 98 percent.
A&B's most troublesome division in recent years, agribusiness, benefited from an accounting change that reduced an operating loss to $800,000 in the fourth quarter from a $6.1 million loss a year earlier despite sugar production falling 22 percent to 23,800 tons.
The accounting change was required when Gay & Robinson stopped farming sugarcane on Kaua'i in October and left A&B's HC&S as the sole member of what was formerly a sugar marketing and transportation cooperative. Consolidating the cooperative left A&B with a special $5.4 million gain for the quarter and full year.
For the full year, the operating loss for agribusiness was $27.8 million, up from a loss of $12.9 million the year before. Sugar production was down 13 percent, to 126,800 tons.
Shares of A&B stock closed down 31 cents yesterday at $33 before the earnings announcement. A&B stock reached a 52-week high of $35.78 on Jan. 11 and a low of $16.21 on March 9.