Alexander & Baldwin reports 2008 net income of $132.4 million
Alexander & Baldwin, Inc. yesterday reported that net income for the full year 2008 was $132.4 million, or $3.19 per diluted share. Net income for the full year 2007 was $142.2 million, or $3.30 per diluted share. Revenue for the full year 2008 was $1,898.3 million, compared with revenue of $1,669.2 million for the full year 2007. Net income for the fourth quarter of 2008 was $23.9 million, or $0.58 per diluted share. Net income in the fourth quarter of 2007 was $36.4 million, or $0.85 per diluted share. Revenue for the fourth quarter of 2008 was $400.0 million, compared with revenue of $433.0 million in the same period of 2007.
“While many of the markets served by Alexander & Baldwin experienced an economic slowdown in 2008, our strong first half performance in development sales, strong property sales throughout the year and increased efficiency measures in our transportation segment enabled the Company to post a favorable full-year result, representing a modest 7 percent year-over-year decline in net income and 3 percent decline in diluted earnings per share,” said Allen Doane, chairman and chief executive officer.
“We are pleased by this performance, but we recognize that our 2009 earnings prospects have been diminished. As a result, we will continue to take all necessary measures – cost containment and expense reduction, deferral of non-essential capital projects, preservation of cash, shoring up of our liquidity sources – to preserve our financial strength. The actions we are taking will give us the flexibility to capitalize on attractive opportunities as they arise, while remaining committed to a strong financial footing.”
“The Ocean Transportation segment posted a 16 percent decline in operating profit in 2008 as compared to 2007, reflecting a considerable decline in container and auto volume, in line with the accelerated contraction of the Hawaii, Guam and China markets. In all of our trade lanes, vigorous focus on cargo mix, yield enhancement, fleet optimization and cost containment initiatives throughout the year partially offset the unexpectedly precipitous volume decline. Earnings from Matson Navigation’s stevedoring joint venture, which are a barometer for Asia-Pacific trade activity, were off significantly. In the fourth quarter, as the full thrust of the economic contraction took hold, volume dropped sharply, resulting in a 30 percent decline in Ocean Transportation operating profit.”
“The Logistics Services segment, like Ocean Transportation, experienced lower volume levels in its service lines that negatively impacted operating profit by 15 percent for the year, although higher yields offset the lower volume to some degree. As well, higher expenses related to the ramp-up of Matson Global Distribution Services (“Matson Global”), including an acquisition, modestly impacted earnings but provide a solid foundation for growth in 2009. Matson Integrated Logistics’ fourth quarter operating profit was off from the prior year due to these same volume declines.”
“Historically low sugar production levels resulting from a two-year drought led to a considerable loss of nearly $13 million in our Agribusiness segment. 2008 was the driest year on record with water deliveries to the fields at 50 percent of the previous 60-year average.”
“Our Real Estate Leasing segment posted operating profit of approximately $48 million, a decline of 7 percent from the prior year, due primarily to higher depreciation expenses attributable to the net addition of 1.3 million square feet to our portfolio, mostly in industrial assets, and to modestly lower U.S. Mainland occupancy late in the year related to softened higher-margin office and retail demand. Fourth quarter results were 16 percent below 2007 levels. Still, average occupancy rates at our properties were at high levels, 98 and 95 percent in the Hawaii and mainland portfolios, respectively.”
“Our Real Estate Sales operating profit in 2008 was very strong, 28 percent higher than 2007, resulting from a diversified mix of residential condominium sales (Oahu), commercial property sales (U.S. Mainland), and land/ground lease sales (Maui). That noted, in the latter half of the year there was a significant drop in development sales activity as consumer demand for primary and resort residential units abated. Fourth quarter operating profit of $19.3 million was 17 percent lower than 2007, comprising a mix of commercial property and land sales.”
“In addition to the financial results achieved, we repurchased nearly 1.5 million shares of the Company’s common stock through open market purchases in 2008 and raised our dividend for the third straight year. These initiatives underscore our commitment to returning cash to shareholders while concurrently making investments that create value over time.”
For the fourth quarter of 2008, lower container volume in all trade lanes resulted in lower revenue and $9.0 million lower operating profit. Ongoing yield and cost containment initiatives, including fleet rationalization, partially offset the impact of reduced volume and higher maintenance and repair expenses. Hawaii container and automobile volume declines (13 and 54 percent, respectively) reflect a broad-based weakness in the economy. China container volume decreased 16 percent compared with the fourth quarter of 2007, due to significantly lower Asian import demand.
For the full year 2008, Ocean Transportation revenue increased by 2 percent due to higher revenue from fuel surcharges, including a bunker adjustment factor introduced into our China trade lane in May, favorable yields, and improved cargo mix that were partially offset by reduced container volume in all trades, principally in Hawaii. Container and auto volume changes were due to the same factors cited for the quarter. Operating profit for 2008 decreased by 16 percent, primarily from the net volume changes, increases in fuel costs, increases in vessel and terminal handling costs due to higher stevedoring rates and lower earnings from Matson’s SSAT joint venture, partially offset by lower voyage costs arising from optimization of fleet deployment, and lower transportation and general and administrative expenses.
“While many of the markets served by Alexander & Baldwin experienced an economic slowdown in 2008, our strong first half performance in development sales, strong property sales throughout the year and increased efficiency measures in our transportation segment enabled the Company to post a favorable full-year result, representing a modest 7 percent year-over-year decline in net income and 3 percent decline in diluted earnings per share,” said Allen Doane, chairman and chief executive officer.
“We are pleased by this performance, but we recognize that our 2009 earnings prospects have been diminished. As a result, we will continue to take all necessary measures – cost containment and expense reduction, deferral of non-essential capital projects, preservation of cash, shoring up of our liquidity sources – to preserve our financial strength. The actions we are taking will give us the flexibility to capitalize on attractive opportunities as they arise, while remaining committed to a strong financial footing.”
“The Ocean Transportation segment posted a 16 percent decline in operating profit in 2008 as compared to 2007, reflecting a considerable decline in container and auto volume, in line with the accelerated contraction of the Hawaii, Guam and China markets. In all of our trade lanes, vigorous focus on cargo mix, yield enhancement, fleet optimization and cost containment initiatives throughout the year partially offset the unexpectedly precipitous volume decline. Earnings from Matson Navigation’s stevedoring joint venture, which are a barometer for Asia-Pacific trade activity, were off significantly. In the fourth quarter, as the full thrust of the economic contraction took hold, volume dropped sharply, resulting in a 30 percent decline in Ocean Transportation operating profit.”
“The Logistics Services segment, like Ocean Transportation, experienced lower volume levels in its service lines that negatively impacted operating profit by 15 percent for the year, although higher yields offset the lower volume to some degree. As well, higher expenses related to the ramp-up of Matson Global Distribution Services (“Matson Global”), including an acquisition, modestly impacted earnings but provide a solid foundation for growth in 2009. Matson Integrated Logistics’ fourth quarter operating profit was off from the prior year due to these same volume declines.”
“Historically low sugar production levels resulting from a two-year drought led to a considerable loss of nearly $13 million in our Agribusiness segment. 2008 was the driest year on record with water deliveries to the fields at 50 percent of the previous 60-year average.”
“Our Real Estate Leasing segment posted operating profit of approximately $48 million, a decline of 7 percent from the prior year, due primarily to higher depreciation expenses attributable to the net addition of 1.3 million square feet to our portfolio, mostly in industrial assets, and to modestly lower U.S. Mainland occupancy late in the year related to softened higher-margin office and retail demand. Fourth quarter results were 16 percent below 2007 levels. Still, average occupancy rates at our properties were at high levels, 98 and 95 percent in the Hawaii and mainland portfolios, respectively.”
“Our Real Estate Sales operating profit in 2008 was very strong, 28 percent higher than 2007, resulting from a diversified mix of residential condominium sales (Oahu), commercial property sales (U.S. Mainland), and land/ground lease sales (Maui). That noted, in the latter half of the year there was a significant drop in development sales activity as consumer demand for primary and resort residential units abated. Fourth quarter operating profit of $19.3 million was 17 percent lower than 2007, comprising a mix of commercial property and land sales.”
“In addition to the financial results achieved, we repurchased nearly 1.5 million shares of the Company’s common stock through open market purchases in 2008 and raised our dividend for the third straight year. These initiatives underscore our commitment to returning cash to shareholders while concurrently making investments that create value over time.”
For the fourth quarter of 2008, lower container volume in all trade lanes resulted in lower revenue and $9.0 million lower operating profit. Ongoing yield and cost containment initiatives, including fleet rationalization, partially offset the impact of reduced volume and higher maintenance and repair expenses. Hawaii container and automobile volume declines (13 and 54 percent, respectively) reflect a broad-based weakness in the economy. China container volume decreased 16 percent compared with the fourth quarter of 2007, due to significantly lower Asian import demand.
For the full year 2008, Ocean Transportation revenue increased by 2 percent due to higher revenue from fuel surcharges, including a bunker adjustment factor introduced into our China trade lane in May, favorable yields, and improved cargo mix that were partially offset by reduced container volume in all trades, principally in Hawaii. Container and auto volume changes were due to the same factors cited for the quarter. Operating profit for 2008 decreased by 16 percent, primarily from the net volume changes, increases in fuel costs, increases in vessel and terminal handling costs due to higher stevedoring rates and lower earnings from Matson’s SSAT joint venture, partially offset by lower voyage costs arising from optimization of fleet deployment, and lower transportation and general and administrative expenses.