A&B Reports $7.5 Million First-Quarter Loss

HC&S field work, final sugar harvest. Photo credit: Chris Archer.

Alexander & Baldwin Inc. announced a net financial loss for the first three months of 2016.

A&B reported a first-quarter net loss of $7.5 million ($.15 per diluted share), which includes a $10.3 million after-tax loss from its agribusiness segment ($.21 per diluted share), principally related to the cessation of sugar operations at its Hawaiian Commercial & Sugar Company.

“Notwithstanding the significant book losses related to the cessation of sugar operations, the final harvest is progressing on schedule and we continue to expect that the cessation will be neutral from a cash perspective,” said Chris Benjamin, A&B president & CEO. “Additionally, we’re advancing our crop trials and diversified agriculture research.”

In January 2016, A&B announced that it would transition HC&S from sugar production to a diversified farm model.

The final sugar harvest that began in March 2016 is underway, on track and expected to be cash-flow neutral, the company reported. 

A&B is in the process of planning for diversified agriculture through several crop and cattle grazing trials, technology research and financial analysis.

“We are very pleased with the performance of our commercial assets during the quarter and the progress we’re making in repositioning the portfolio,” said Benjamin.

Revenue (gross income before deducting the cost of goods sold, expenses and losses) for the first quarter of 2016 was $108.8 million, compared to revenue of $150.7 million for the first quarter of last year. Revenue declined due to fewer development sales, a decrease in asphalt prices and lower qgribusiness revenue due to lower sugar deliveries and power sales.

Earnings (net income after deducting the cost of goods sold, expenses and losses) for the first quarter of last year were $25.3 million ($.51 per diluted share), and included positive after-tax earnings from A&B’s agribusiness segment of $1.2 million ($.02 per diluted share).

Benjamin reported that the company advanced the migration and expansion of A&B’s commercial assets through the January acquisition of the 139,300-square-foot Mānoa Marketplace—the second largest grocery-anchored center in urban Honolulu—and the continued identification and execution of growth opportunities in existing Hawai‘i assets.

Leasing net operating income was up 7.2% to $22.4 million, while occupancy remained high at 94%.

Excluding the agribusiness impact, the largest negative variance in the quarter-over-quarter comparison relates to the first-quarter 2015 closing of 328 units at the Waihonua condominium joint venture project.

A lull in real estate sales during the quarter resulted in an operating loss from development business, Benjamin said, “but we look forward to stronger sales later in the year, particularly the closings of units at The Collection in the fourth quarter.”

A&B’s materials and construction segment continues to perform well, generating first-quarter earnings (before interest, taxes, depreciation and amortization) of $10.4 million, and its outlook remains positive due to a healthy paving backlog, Benjamin said.

Find more information and the complete financial report online.