Sugar sales and commercial real estate leasing helped produce a $5 million profit for Alexander & Baldwin Inc. in the second quarter as the company absorbed a loss from its residential property development and sales.
The earnings for the Honolulu-based real estate investment and development firm represented a turnaround from a $4.4 million loss in last year’s second quarter that included expenses to spin off former subsidiary Matson Navigation Co.
A&B released its financial report Thursday and noted that last month marked one full year since the Matson split.
Matson is Hawaii’s largest ocean transportation firm, and historically generated much of A&B’s revenue and profit. Since the split, A&B has focused heavily on growth.
During the second quarter the company announced planned acquisitions of the state’s largest paving contractor and a retail center that will make A&B the second-largest retail property owner and operator in Hawaii.
“The quarter was highlighted by significant investments we’ve made or announced that will support future value creation,” Stan Kuriyama, A&B chairman and chief executive officer, said in a statement.
The acquisitions of Grace Pacific Corp. and Pearl Highlands Center are slated to be completed later this year, so no revenue or earnings from those operations factored into A&B’s second-quarter financial results.
A&B did incur $1.5 million in expenses during the quarter related to the Grace purchase. Without that, A&B’s second-quarter profit would have been $6.5 million.
Along a similar line, A&B would have had a $5.5 million profit in the 2012 second quarter excluding Matson separation costs.
During the recent quarter, revenue slipped a bit to $71.1 million from $72.1 million a year earlier.
A&B derived most of its revenue from agribusiness operations that include Hawaiian Commercial & Sugar Co. on Maui.
Revenue from this division totaled $43.5 million in the quarter, up 9 percent from $39.9 million a year earlier. Agribusiness operating profit rose 19 percent to $8.3 million from $7 million in the same period.
Real estate leasing, which includes A&B’s ownership of shopping centers and other commercial property, generated $26.2 million in revenue during the second quarter, up 3 percent from $25.5 million a year earlier. Operating profit for this division edged up 1 percent to $10.6 million from $10.5 million.
Property development and sales produced just $1.4 million in revenue during the second quarter, down 80 percent from $7 million a year earlier. A&B suffered a $700,000 operating loss in this division, which was an improvement from a $9.9 million operating loss a year earlier.
However, the year-earlier loss was driven mainly by two development projects in California that were devalued as part of the Matson separation.
In a conference call with stock analysts, A&B officials said the results from real estate development and sales vary by nature and that the company is well positioned to capitalize on a strengthening local housing market and economy with new-home projects in various stages of development.
The company said its 340-unit Waihonua condominium tower in Kakaako is sold out. Another condo tower, a 206-unit project at Ala Moana Center next to Nordstrom in which A&B has invested $20 million, is also sold out.
However, revenue from those projects won’t be recognized until the towers are completed in 2014 for the Ala Moana tower and 2015 for Waihonua.
A&B won approval from the state Wednesday to develop a 467-unit condo complex in Kakaako called The Collection. Construction is projected to start next year and be completed in 2016.
A&B also is developing homes and residential lots at a few neighbor island resorts, though sales have been much slower to recover compared with Oahu’s primary housing market.
Shares of A&B stock closed at $42.73 Thursday before the company’s earnings announcement. A&B stock over the last 52 weeks has been as high as $45.92 on July 18 and as low as $26.39 on Oct. 23.
