Profits nearly doubled for Alexander & Baldwin from $5 million to $9.2 million, thanks to recent acquisitions and improvements in the company's development and sales and leasing segments, according to A&B's second-quarter report, which was released last week.
Recent weather conditions, however, have dampened overall profits due to dramatic decreases in sugar production for its agribusiness sector leader, Hawaii Commercial & Sugar Co.
The period from April to June saw revenues at $146.7 million, compared to last year's $62.6 million. The Oahu-based Grace Pacific LLC, a construction company purchased for $1.5 million in October, contributed to the increase after improving "significantly" from the first quarter of this year.
Overall, the company spent more than $1 billion on acquisitions last year.
"Since separating from Matson two years ago, we've focused on positioning the company to capitalize on growth in Hawaii's economy, and we're seeing the benefits of this strategy," A&B Chairman and CEO Stanley M. Kuriyama said in the report. "Earnings have improved compared to last year, and we are encouraged by the pickup in sales activity at our development projects, and the performance of our commercial portfolio."
The real estate development and sales segment enjoyed a profit of $7.8 million in the second quarter, compared to a loss of $700,000 during the same time last year. The company attributed the gain to the sale of a residential lot on Maui; 13 lots on Oahu, the Big Island and Kauai; and five other noncore parcels of land.
A&B plans to add 600 affordable and market-priced homes in South Maui after receiving final zoning approval from Mayor Alan Arakawa last week. The company said that the Kihei residential project will include single-family and multifamily homes, as well as parks and open space for the community.
The project is headed for advanced engineering and design work to obtain subdivision approval, and sales of homes are expected to close in 2018.
A&B's agribusiness suffered for the quarter with profits at $400,000 - far below the $8.3 million raked in last year, according to the report. The company pointed to lower prices for raw sugar sold and lower volumes of molasses sold as for some of the reasons of the decrease.
A&B owns nearly 89,000 acres in Hawaii and is the state's fourth-largest private landowner. The company owns and operates the state's only sugar plantation, led by the 36,000-acre HC&S.
Sugar production for the first half of the year was "significantly lower" than the same period last year, dropping from 74,600 tons to 48,300, the company reported. HC&S produced only 1,400 tons of sugar from January to March.
"Extremely wet weather conditions through May have led to a significant reduction in sugar production year-to-date, and expectations for full-year sugar production have therefore been reduced," the company said in the report. "While it is very difficult to accurately predict full-year results with about 55 percent of the crop still to be harvested, recent increases in raw sugar prices, coupled with ongoing efforts to contain operating costs, are expected to largely offset the negative impact of lower full-year production."
A&B said that wet conditions caused "lower number of acres harvested and lower yields" and surmised that operating losses for HC&S are projected at $6 million to $9 million for the entire year.
* Chris Sugidono can be reached at email@example.com.