Slowing economies in Hawai'i and on the Mainland dragged down profits of Alexander & Baldwin Inc. by 25 percent to $36.8 million in the third quarter from $49.1 million a year earlier despite higher revenue.

The Honolulu-based company engaged in ocean transportation, agriculture and real estate development and leasing said the performance was relatively good considering weakened economic conditions.

"We did relatively well in the third quarter given the deteriorating conditions in the markets we serve," Allen Doane, A&B's chairman and CEO, said in a statement. "Continuing cost containment and revenue optimization efforts have offset to some degree the impact of much weaker economic conditions."

A&B managed to increase revenue in the quarter, almost solely from its transportation business that includes Matson Navigation Co., but operating profits declined in transportation and real estate while agriculture operations lost more money.

Total third-quarter revenue was $458.6 million, up 6 percent from $432.9 million a year earlier.

Profit per diluted share of A&B stock was 89 cents, down from $1.14 a year earlier.

Shares of A&B yesterday fell $3.56 to close at $28.50, a 52-week low. Earlier this month company shares had closed as high as $45.10 on the New York Stock Exchange.

The biggest decline in operating profit for A&B was in real estate sales, which in part reflected major property sales in the 2007 third quarter that generated strong profits and included the land under the Honolulu Don Quijote store and and two retail centers on Maui. Those deals helped make the year-ago quarter a "whopper" for earnings, A&B said at the time.

In the recent quarter, A&B property sales generated $77.2 million in revenue, down 2 percent from $78.5 million. But operating profit fell 32 percent to $25.8 million from $37.9 million.

Sales in the recent quarter included the Boardwalk Shopping Center in Texas, Marina Shores Shopping Center in California and 3.9 acres of vacant commercial land in Kahului, Maui.

Residential property sales for A&B at Hawai'i projects "drastically" slowed, but the company said it continues to invest in development such as its 1,500-home luxury subdivision Kukui'ula on Kaua'i.

Operating profit in real estate leasing was down 9 percent to $11.1 million from $12.2 million, primarily due to some tenant losses at A&B Mainland properties, where occupancy slipped 2 percent to 95 percent. The occupancy rate at A&B's Hawai'i real estate leasing portfolio was unchanged at 98 percent.

"The overall condition of our portfolio is sound," Stan Kuriyama, A&B's president, said in a conference call with stock analysts.

At Matson, revenue was up 5 percent to $272.8 million largely from higher fuel surcharges. But operating profit was down 19 percent to $31.4 million largely from a 5 percent decline in container volume and higher expenses.

Hawai'i container volume was down 7 percent to 39,900 from 42,900 in the comparable quarters, and Hawai'i automobile shipments were down 29 percent to 21,800 from 30,800.

Matson's China container service was down 2 percent due to lower Asian import demand, and Guam service was flat.

A&B said a recent federal court decision on whether renovations made to the Matson ship MV Mokihana two years ago violate the domestic shipping provisions of the Jones Act could affect Matson's ability to use the ship in U.S. waters.

Matson converted the Mokihana into a combination container vessel and roll-on/roll-off ship that makes transporting vehicles more efficient. Some of the modification work was done in China, which led the Shipbuilders Council of America and rival ocean transportation firm Pasha Hawaii Transport Lines to seek to enjoin Matson from sailing the ship domestically by suing several federal agencies that govern shipping including the Coast Guard.

A federal judge in Virginia made a preliminary ruling on Sept. 30 in favor of the plaintiffs, but has yet to issue a detailed opinion and final order.

"Matson does not agree with this decision and will take appropriate action after the opinion is issued," Doane said in the conference call. "At this time we are unable to determine the outcome or the financial impact, if any."

Matson has an 11-ship fleet, but this year has only been using 10 ships because of the slowdown in business.

Agriculture for A&B, which includes Hawaiian Commercial & Sugar Co. and Kaua'i Coffee Co., has been a particularly challenging business lately. The division posted a $6.7 million third-quarter operating loss, which roughly doubled the $3.2 million loss in the same quarter last year.

Drought conditions on Maui hurt sugarcane production, which totaled 50,500 tons in the quarter, down 13 percent from a year earlier. Kuriyama said the shortage of rain this year is the worst since the company began keeping records in 1925, and follows the second-worst year last year.

"That's having a big impact on our sugar production," he said in the conference call.

Partially offsetting lower sugar volume was improved sales from sugar-related power generation that benefitted from higher power prices and volume.

For the first nine months of this year, A&B net income was $108.5 million, or $2.61 per diluted share, up from $105.8 million, or $2.46 per diluted share, in the same period last year.

"We are pleased at this stage of the year to be slightly above 2007 in earnings, but we realize the challenges of the current economic turmoil make it difficult to maintain this performance," Doane said.

A&B plans to pay a fourth-quarter dividend of 31.5 cents per share, payable on Dec. 4 to shareholders of record as of the close of business on Nov. 6.