Alexander & Baldwin Inc.’s agricultural sector – led by Maui’s Hawaiian Commercial & Sugar Co. – produced a “strong performance” in 2011 while losses related to Matson Navigation Co. and the real estate sales division put a drag on company profits.
In reporting its 2011 and fourth-quarter financial results Monday, the Honolulu-based company said it logged a net income of $34.2 million, or 81 cents a share, for the year, down 63 percent from the $92.1 million, or $2.22 a share, in 2010 and down nearly 75 percent from the $132 million, or $3.19 a share, in 2008, as the Great Recession began roiling the national economy.
For the fourth quarter, A&B’s net income was only $1.6 million, or 4 cents a share, down from $20.2 million, or 48 cents a share, in the same quarter the previous year.
The company’s ocean transportation sector showed an operating profit of $74.1 million for the year, down from $118.7 million in 2010. This sector of the company suffered losses from the discontinuing of its second China-Long Beach service in the third quarter.
In addition, A&B said that the company continues to make progress on plans to separate its shipping and real estate/agricultural businesses in the second half of this year.
The agricultural sector, which includes HC&S and trucking and storage companies on Maui, Kauai and the Big Island, showed an operating profit of $22.2 million in 2011, up 264 percent from $6.1 million in 2010. This is a big contrast from three years ago, when agriculture lost $27 million and the board of directors debated shutting down sugar operations.
Alexander & Baldwin Inc. said today its board of directors has approved a plan to split the company into two separate companies, one focusing on real estate and agriculture and the other on shipping.
The two companies would be independent and publicly traded, the company said in a news release.
Under the plan, A&B shareholders will own one share of both A&B and Matson stock for each share of company stock owned. The separation is expected to be completed in the second half of 2012.
The announcement was made after the market closed. A&B’s shares rose $1.50 to $39.56 in after hours trading.
“Over the past decade, Alexander & Baldwin’s board of directors and management have periodically conducted strategic reviews, including an evaluation of the merits of separating into two companies,” said Walter Dods, A&B’s chairman. “After thorough evaluation, we have concluded that the increased size, capabilities and financial strength of both our land and transportation businesses now enable these operations to independently execute their strategies to maximize shareholder value.”
Honolulu-based A&B has grown substantially over the past decade. Its commercial real estate portfolio has increased by almost 50 percent to its present size of 7.9 million square feet, comprising 44 properties in Hawaii and eight mainland states. The portfolio of commercial properties generates a significant and stable source of cash flow for the company, and is an important source of capital for A&B’s real estate investment and development activity.
Although its agribusiness sector continued its recovery in the first quarter, Alexander & Baldwin’s usual profit center, Matson Navigation Co., lost money, and the company reported a thin profit of $5.2 million, or 12 cents per share, Tuesday.
President Stanley Kuriyama said Matson couldn’t adjust its fuel surcharges fast enough to keep up with soaring oil prices.
Agribusiness, primarily Hawaiian Commercial & Sugar Co., had an operating profit of $2.6 million, compared with a loss of $1.1 million in the first quarter of 2010.
It is difficult to compare quarter-to-quarter results for HC&S, since in the first quarter of 2010 the Puunene mill shut down for an extended overhaul and harvesting did not begin until the second quarter. But Kuriyama pointed out that the company’s agriculture operation has now experienced four straight quarters of profitability, following years of serious losses.
It is also difficult to compare quarter-to-quarter changes at Matson, because it signed a significant connecting carrier agreement with a large international carrier and opened a second service to China. Both increased business, but the startup costs for the second “string” of voyages to China resulted in a loss.
Hawaii container traffic was up to 34,000, from 31,400 the year before, partly indicating expansion in the island economy.
One of Hawaii’s last venerable Big Five companies, Alexander & Baldwin Inc., could be under pressure to break itself up.
A New York hedge fund manager known to agitate for change in his investment targets bought nearly 10 percent of A&B along with a partner, it was announced yesterday. The purchase triggered expectations the 141-year-old kamaaina company will be split into pieces to elevate stock value.
Neither A&B nor the hedge funds would disclose what the intent of the A&B stock purchase — a $168 million deal — might be yesterday.
“We expect to have a constructive dialogue with them as we do with all of our shareholders,” said Suzy Hollinger, A&B’s director of investor relations.
But stock analysts with insights to A&B and people with ties to the 2,300-employee company say the play almost certainly is a breakup of the conglomerate’s three core businesses — ocean cargo transportation, commercial real estate and agriculture.
“Are the parts worth more than the whole? That’s what this comes down to,” said local stock analyst Randy Havre, echoing views of two other analysts who closely follow A&B.
Alexander & Baldwin Inc. earnings were about flat in the last three months of 2010, but bigger gains earlier in the year enabled the diversified Honolulu-based company to more than double its full-year profit.
A&B reported 2010 net income of $92.1 million, up from $44.2 million the year before.
Fourth-quarter net income was $20.2 million, barely up from $20.1 million in the same quarter in 2009.
Revenue in the fourth quarter totaled $461.4 million, compared with $362.9 million in the year-ago quarter. Full-year revenue totaled $1.6 billion, up from $1.4 billion in 2009.
A&B said its profit was principally driven by ocean cargo transportation subsidiary Matson Navigation Co. operations in China, real estate sales and a turnaround in its sugar business on Maui.
Alexander & Baldwin Inc. tripled its third-quarter profit with greatly improved performances from its ocean transportation service in China and sugar business on Maui.
The Honolulu-based company reported today earning a net profit of $25.7 million, or 62 cents per diluted share of stock, in the July-September period, up from $8.5 million, or 21 cents per share, in the same period last year.
The big gain was largely from A&B’s ocean cargo subsidiary, Matson Navigation Co., which posted a 67 percent rise in operating profit to $40.4 million in the third quarter from $24.2 million a year earlier.
A&B said Matson’s performance was principally driven by higher volume and yields in its China service, which it expanded in mid-September.
Another contributor to the rise in profit was A&B’s Maui sugar subsidiary, Hawaiian Commercial & Sugar Co., which benefited from higher sugar prices and production.
HC&S, along with Kauai Coffee Co., delivered an $800,000 operating profit for A&B, which represents a $13 million improvement from a $13.8 million operating loss in the 2009 third quarter.
Operating profits from real estate leasing and sales were lower for A&B.
Alexander & Baldwin Inc. said it earned $28.9 million, or 70 cents per share, in the second quarter.
President Stan Kuriyama called it “a strong second quarter” compared with the $12.6 million earned in the second quarter of 2009.
Revenue was $398.9 million, compared with $351.0 million for the year before.
On Maui, Hawaiian Commercial & Sugar Co. made a sharp rebound after a bad 2009, which had the A&B board of directors considering whether to continue in sugar.
For the first half – a more informative period for comparison than just the second quarter – operating profit in agribusiness (which includes Kauai Coffee) rose by $13.9 million and net profit edged into the black at $700,000. Agribusiness had lost a net $13.2 million in the first half of 2009.
HC&S shut down its mill for an unusually long refit and it reorganized its plantings, which have been affected by drought for several years. Operational improvements combined with better prices for raw sugar turned losses into profits.
For the January-June period, Maui Brand specialty sugar sales were down $2 million and molasses sales were down $1.3 million, but power sales were up $1.5 million. Coffee sales increased by $1.5 million as well.
The big gains came from raw sugar, whose output was 31 percent higher, primarily from better growing conditions.