A&B Reports 3rd Quarter 2008 Net Income of $36.8 Million

October 24, 2008

Nine Month Earnings up Year Over Year

HONOLULU--(BUSINESS WIRE)--

Alexander & Baldwin, Inc. (NYSE:AXB) today reported that net income for the third quarter of 2008 was $36.8 million, or $0.89 per fully diluted share. Net income in the third quarter of 2007 was $49.1 million, or $1.14 per fully diluted share. Revenue in the third quarter of 2008 was $458.6 million, compared with revenue of $432.9 million in the third quarter of 2007.

Net income for the first three quarters of 2008 was $108.5 million, or $2.61 per fully diluted share. Net income in the first three quarters of 2007 was $105.8 million, or $2.46 per fully diluted share. Revenue for the first three quarters of 2008 was $1,501.2 million, compared to revenue of $1,239.6 million in the same period of 2007.

COMMENTS ON QUARTER

"We did relatively well in the third quarter given the deteriorating conditions in the markets we serve," said Allen Doane, chairman and chief executive officer of A&B. "Continuing cost containment and revenue optimization efforts have offset to some degree the impact of much weaker economic conditions. We are pleased at this stage of the year to be slightly above 2007 in earnings but we realize the challenges of the current economic turmoil make it difficult to maintain this performance."

"Ocean Transportation produced a good quarter, with earnings of over $31 million. Total container volume decreased 5 percent versus the prior year. The drop in container volume was attributable mostly to slowing market conditions in Hawaii. Guam and China volumes remained essentially flat. In all of our trade lanes, improvements in yield management and ongoing cost containment initiatives, including fleet rationalization, partially offset the impact of reduced volume and higher vessel expenses. Late quarter declines from the historic high price of bunker fuel positively impacted our fuel recovery in China, where surcharge mechanisms are a mix of floating and fixed per-container fees."

"The logistics segment posted operating profit of $5.1 million. Year over year volume declines of 8 and 11 percent in the highway and rail segments, respectively, negatively impacted earnings. Non-recurring reductions in accruals and lower provision for bad debts that occurred in the third quarter of 2007 also contributed to a negative year over year comparison. Volume decreases stemmed from the softening in domestic logistics markets, in line with slackening consumer demand. Strategic growth initiatives accelerated during the quarter with the commencement of warehousing operations in Savannah through MIL's Matson Global subsidiary, and the acquisition of a San Francisco Bay Area warehousing and distribution company."

"Agribusiness segment results were severely impacted by significant erosion in raw sugar production caused primarily by severe drought conditions on Maui. We have, therefore, lowered our annual production forecast, which resulted in a higher cost per ton for our sugar. The segment posted a $6.7 million loss for the quarter. Higher power sales partially offset the impact of the sugar production decline."

"Our real estate leasing segment posted operating profit of $11.1 million. Modest occupancy losses in a few retail and office properties, directly related to softening economic market conditions, unfavorably impacted results in the quarter. Despite recent market trends, occupancy levels for the quarter remained high at 98 and 95 percent, respectively, in the Hawaii and mainland portfolios for the quarter."

"Real estate sales operating profit was $25.8 million. This favorable result was driven largely by the sale of two retail properties and a vacant Maui commercial parcel in the quarter. The retail sales, at favorable cap rates, capture the embedded value of the enhancements we achieved through our asset management efforts during our ownership and reflect the underlying appreciation of real estate values in the markets in which we invested. Residential sales were nominal and will continue to be negatively impacted by substantially softened buyer demand."

TRANSPORTATION -- OCEAN TRANSPORTATION


----------------------------------------------------------------------
                                       Quarter Ended September 30,
----------------------------------------------------------------------
(dollars in millions)                    2008        2007       Change
----------------------------------------------------------------------
Revenue                            $    272.8  $    259.9           5%
Operating profit                   $     31.4  $     38.6         -19%
Operating profit margin                  11.5%       14.9%
----------------------------------------------------------------------
Volume (Units)
   Hawaii containers (1)               39,900      42,900          -7%
   Hawaii automobiles                  21,800      30,800         -29%
   China containers                    12,300      12,500          -2%
   Guam containers                      3,600       3,600          --
----------------------------------------------------------------------

(1) Includes approximately 900 containers moved under contract in 2008 that will not recur. The quarter-over-quarter change in Hawaii container volumes excluding the non-recurring volumes related to the contract of carriage is a decrease of 9 percent.

For the third quarter of 2008, higher revenue from fuel surcharges, favorable yields, and improved cargo mix were offset by reduced container volume in the Hawaii and China trade lanes, which were down 7 and 2 percent, respectively, resulting in $7 million lower operating profit. In all of our trade lanes, ongoing cost containment initiatives, including fleet rationalization, partially offset the impact of reduced volume and higher maintenance and repair expenses. Lower Hawaii container and automobile volume reflect a broad-based decline caused by overall weakness in Hawaii's economy. China container volume decreased 2 percent compared with the third quarter of 2007, due to lower Asian import demand, partially offset by aggressive yield management strategies. This lower import demand also negatively impacted earnings from Matson's SSAT West Coast stevedoring joint venture. Average bunker fuel costs in the quarter increased by over 78 percent from the prior year, from $60.19 to $107.17 per barrel, which impacted profitability in the China trade lane, where fuel recovery mechanisms do not capture the entirety of bunker fuel cost increases.


----------------------------------------------------------------------
                                     Nine Months Ended September 30,
----------------------------------------------------------------------
(dollars in millions)                     2008        2007      Change
----------------------------------------------------------------------
Revenue                            $     784.2  $    744.6          5%
Operating profit                   $      84.7  $     96.5        -12%
Operating profit margin                   10.8%       13.0%
----------------------------------------------------------------------
Volume (Units)
   Hawaii containers (1)               116,800     126,000         -7%
   Hawaii automobiles                   71,000      76,900         -8%
   China containers                     36,700      38,000         -3%
   Guam containers                      10,600      10,700         -1%
----------------------------------------------------------------------

(1) Includes approximately 900 containers moved under contract in 2008 that will not recur. The year-over-year change in Hawaii container volumes excluding the non-recurring volumes related to the contract of carriage is a decrease of 8 percent.

For the first nine months of 2008, Ocean Transportation revenue increased by 5 percent due to principally the same factors cited for the quarter. Container and auto volume changes also were due to the same factors cited for the quarter. Operating profit for the first nine months of 2008 decreased by 12 percent, primarily from the net volume changes, 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 transportation and operations overhead expenses.

TRANSPORTATION -- LOGISTICS SERVICES


----------------------------------------------------------------------
                                          Quarter Ended September 30,
----------------------------------------------------------------------
(dollars in millions)                         2008      2007    Change
----------------------------------------------------------------------
Intermodal revenue                       $    73.9  $   71.7        3%
Highway revenue                               44.2      38.7       14%
                                         ---------- ---------
   Total Revenue                         $   118.1  $  110.4        7%
----------------------------------------------------------------------
Operating profit                         $     5.1  $    6.0      -15%
Operating profit margin                        4.3%      5.4%
----------------------------------------------------------------------

Logistics Services operating profit fell by $0.9 million compared to the third quarter of 2007 as 11 and 8 percent decreases in volume in the intermodal (rail) and highway (truck) services, respectively, impacted earnings. The difference in the year over year comparison is due to the non-recurring items that positively impacted income in the third quarter of 2007. The commencement of Matson Global's warehousing operations positively impacted revenues and earnings, as did the mid-quarter acquisition of a regional warehousing and distribution company. Gross margins for intermodal service lines improved significantly, while gross margins for highway service lines generally were flat. Reductions in volume reflect worsened economic conditions and some loss of highway agent activity. Despite the volume reduction, the revenue base increased modestly for the quarter as a result of higher fuel surcharges.


----------------------------------------------------------------------
                                      Nine Months Ended September 30,
----------------------------------------------------------------------
(dollars in millions)                       2008       2007     Change
----------------------------------------------------------------------
Intermodal revenue                    $    212.2  $   209.8         1%
Highway revenue                            124.0      115.9         7%
                                      ----------- ----------
   Total Revenue                      $    336.2  $   325.7         3%
----------------------------------------------------------------------
Operating profit                      $     14.4  $    17.2       -16%
Operating profit margin                      4.3%       5.3%
----------------------------------------------------------------------

For the first nine months of 2008, logistics revenue and gross margins increased or stayed the same for principally the same factors cited for the quarter. Operating profit and volume decreases also were due to the same factors cited for the quarter.

REAL ESTATE -- INDUSTRY


    Real estate leasing and sales revenue and operating profit are
analyzed before discontinued operations are removed. This is
consistent with how the Company evaluates and makes decisions
regarding capital allocation.

    REAL ESTATE -- LEASING


----------------------------------------------------------------------
                                           Quarter Ended September 30,
----------------------------------------------------------------------
(dollars in millions)                          2008     2007    Change
----------------------------------------------------------------------
Revenue                                    $   26.2  $  26.3       --
Operating profit                           $   11.1  $  12.2       -9%
Operating profit margin                        42.4%    46.4%
----------------------------------------------------------------------
Occupancy Rates:
   Mainland                                      95%      97%      -2%
   Hawaii                                        98%      98%      --
----------------------------------------------------------------------
Leasable Space (million sq. ft.):
   Mainland                                     5.9      3.9       51%
   Hawaii                                       1.3      1.4       -7%
----------------------------------------------------------------------

In the third quarter of 2008, Real Estate Leasing revenue was flat and operating profit was lower by 9 percent primarily due to lower occupancy in certain mainland properties (mostly higher margin office properties), partially offset by the net improvement in margin resulting from acquisition and disposition activity, as well as lower general and administrative costs. Lower mainland U.S. occupancy is attributable to general slowing in economic activity and, to a lesser degree, the loss of two regional mortgage tenants. During the quarter, the company sold its Boardwalk Shopping Center (Texas) and Marina Shores Shopping Center (California) and acquired the Republic Distribution Center (Texas). As a result of these and prior year acquisitions, gross Mainland U.S. leasable square feet increased 51 percent, or 2.0 million square feet, from the year earlier period. Hawaii gross leasable square feet decreased as a result of the prior sale of two Maui retail centers.


----------------------------------------------------------------------
                                       Nine Months Ended September 30,
----------------------------------------------------------------------
(dollars in millions)                       2008      2007      Change
----------------------------------------------------------------------
Revenue                                $    82.3  $   81.5          1%
Operating profit                       $    37.6  $   39.5         -5%
Operating profit margin                     45.7%     48.5%
----------------------------------------------------------------------
Occupancy Rates:
   Mainland                                   96%       97%        -1%
   Hawaii                                     98%       98%        --
----------------------------------------------------------------------


    For the first nine months of 2008, real estate leasing revenue
increased by 1 percent from the year earlier period. Operating profit
decreased modestly for the first nine months of 2008, resulting from
higher depreciation expenses and lower mainland occupancy.
Depreciation expenses increased primarily due to the 2007 sale of land
that was ground leased to a retail tenant, and the subsequent
tax-deferred reinvestment of sale proceeds in depreciable commercial
property.

    REAL ESTATE -- SALES


----------------------------------------------------------------------
                                           Quarter Ended September 30,
----------------------------------------------------------------------
(dollars in millions)                          2008     2007    Change
----------------------------------------------------------------------
Improved property sales                    $   61.2  $  73.6      -17%
Development sales                               7.1      4.2       69%
Unimproved/other property sales                 8.9      0.7       13X
                                           --------- --------
   Total revenue                           $   77.2  $  78.5       -2%
----------------------------------------------------------------------
Operating profit before joint ventures     $   25.5  $  33.9      -25%
Earnings from joint ventures                    0.3      4.0      -93%
                                           --------- --------
   Total operating profit                  $   25.8  $  37.9      -32%
----------------------------------------------------------------------

Third quarter 2008 Real Estate Sales revenue and operating profit were principally the result of the sales of the Boardwalk Shopping Center (Texas) and Marina Shores Shopping Center (California) described above, and the sale of a 3.9-acre vacant commercial parcel in Kahului, Maui in September. Additionally, a number of development and joint venture residential sales contributed to earnings for the quarter. Revenue and operating profit for the third quarter of 2008 were lower than 2007 due to the higher revenue and operating profit associated with the 2007 sales of a four-acre land parcel ground leased to a retail tenant in Honolulu and two retail centers on Maui.


----------------------------------------------------------------------
                                       Nine Months Ended September 30,
----------------------------------------------------------------------
(dollars in millions)                        2008      2007     Change
----------------------------------------------------------------------
Improved property sales                $     73.3  $   73.6        --
Development sales                           211.8       4.2        50X
Unimproved/other property sales              10.7       7.6        41%
                                       ----------- ---------
   Total revenue                       $    295.8  $   85.4         3X
----------------------------------------------------------------------
Operating profit before joint ventures $     66.0  $   35.7        85%
Earnings from joint ventures                 10.3      15.6       -34%
                                       ----------- ---------
   Total operating profit              $     76.3  $   51.3        49%
----------------------------------------------------------------------

For the first nine months of 2008, revenues and operating profit were substantially higher than from the same period in 2007, due to ongoing development residential unit sales at the Company's Keola La'i and Keala'ula projects and to the commercial property dispositions described above. In addition to the sales cited above, the Company sold several buildings at a joint venture in Valencia, California and received a final insurance payment of nearly $8 million from the 2005 fire at Kahului Shopping Center in the first quarter of 2008, which contributed to the favorable year over year results. These increases were partially offset by the 2007 sales as cited above.

AGRIBUSINESS

The operating results of the Agribusiness segment are highly dependent on a number of factors, including sugar and power volumes and pricing, and the costs of inputs such as labor, fuel and fertilizers. Weather conditions represent one of the most important factors affecting operating results because they affect yields, volume of electricity generation and sales, plantings, harvesting, and factory operations. Consequently, operating results from the Agribusiness segment will vary from period to period.


----------------------------------------------------------------------
                                          Quarter Ended September 30,
----------------------------------------------------------------------
(dollars in millions)                         2008      2007    Change
----------------------------------------------------------------------
Revenue                                  $    37.5  $   37.3        1%
Operating loss                           $    (6.7) $   (3.2)    -109%
----------------------------------------------------------------------
Tons sugar produced                         50,500    58,300      -13%
----------------------------------------------------------------------

Third quarter 2008 Agribusiness revenue increased moderately and operating profit decreased significantly, principally the result of lower sugar production and higher operating costs. Sugar production was 13 percent lower in the third quarter of 2008 than in the same period of 2007 due to lower average yields per acre that are mainly attributable to insufficient water availability. Partially offsetting the lower sugar volume were improved power sales resulting from higher power prices and volume.


----------------------------------------------------------------------
                                       Nine Months Ended September 30,
----------------------------------------------------------------------
(dollars in millions)                        2008       2007    Change
----------------------------------------------------------------------
Revenue                                $     96.2  $    93.0        3%
Operating profit (loss)                $     (6.8) $     0.9       NM
----------------------------------------------------------------------
Tons sugar produced                       114,800    130,500      -12%
----------------------------------------------------------------------

In the first nine months of 2008, Agribusiness revenues increased 3 percent, compared to the same period of 2007, due primarily to higher power revenue and higher specialty sugar sales. Operating profit decreased significantly due to lower sugar production and higher operating costs, offset only partially by higher power prices and volume.

CORPORATE EXPENSE


    Third quarter 2008 corporate expenses of $5.3 million were $0.7
million lower than the third quarter of 2007. The decrease is due
principally to lower accruals related to performance-based incentive
programs, and to other cost containment initiatives related to
corporate overhead.

    CONDENSED CASH FLOW TABLE


----------------------------------------------------------------------
                                           Year-to-Date September 30,
----------------------------------------------------------------------
(dollars in millions, unaudited)               2008     2007    Change
----------------------------------------------------------------------
Cash Flow from Operating Activities        $    202  $    78        3X
                                           --------- --------

Capital Expenditures (1)
    Transportation                              (29)     (51)     -43%
    Real Estate                                 (51)      (8)       6X
    Agribusiness and other                      (11)     (13)     -15%
                                           --------- --------
Total Capital Expenditures                      (91)     (72)      26%

Other Investing Activities, Net                 (49)     (15)       3X
                                           --------- --------
Cash Used in Investing Activities          $   (140) $   (87)      61%
                                           --------- --------

Net Debt Proceeds                                17       33      -48%
Repurchase of Capital Stock                     (50)     (12)       4X
Dividends Paid                                  (38)     (36)       6%
Other Financing Activities, Net                   2        8      -75%
                                           --------- --------
Cash Used in Financing Activities          $    (69) $    (7)      10X
                                           --------- --------

Net Decrease in Cash                       $     (7) $   (16)     -56%
----------------------------------------------------------------------

(1) Excludes non-cash 1031 transactions and real estate development
 activity.

Alexander & Baldwin, Inc., headquartered in Honolulu, is engaged in ocean transportation and logistics services, through its subsidiaries, Matson Navigation Company, Inc. and Matson Integrated Logistics, Inc.; in real estate, through A&B Properties, Inc.; and in agribusiness, through Hawaiian Commercial & Sugar Company and Kauai Coffee Company, Inc. Additional information about A&B may be found at its web site: www.alexanderbaldwin.com.

Statements in this press release that are not historical facts are "forward-looking statements," within the meaning of the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. These forward-looking statements are not guarantees of future performance. This release should be read in conjunction with our Annual Report on Form 10-K and our other filings with the SEC through the date of this release, which identify important factors that could affect the forward-looking statements in this release.


                      ALEXANDER & BALDWIN, INC.
    2008 and 2007 Third-Quarter and Nine Month Results (Condensed)
          (In Millions, Except Per Share Amounts, Unaudited)

                                                      2008      2007
                                                    --------  --------
Three Months Ended September 30:
---------------------------------------------------
Revenue                                             $  458.6  $  432.9
Income From Continuing Operations                   $   19.8  $   26.0
Discontinued Operations (1)                         $   17.0  $   23.1
Net Income                                          $   36.8  $   49.1
Basic Share Earnings
   Continuing Operations                            $   0.48  $   0.61
   Net Income                                       $   0.89  $   1.15
Diluted Share Earnings
   Continuing Operations                            $   0.48  $   0.61
   Net Income                                       $   0.89  $   1.14
Weighted Average Number of Basic Shares Outstanding     41.3      42.6
Weighted Average Number of Diluted Shares
 Outstanding                                            41.5      43.0

                                                      2008      2007
                                                    --------  --------
Nine Months Ended September 30:
---------------------------------------------------
Revenue                                             $1,501.2  $1,239.6
Income From Continuing Operations                   $   85.8  $   80.0
Discontinued Operations (1)                         $   22.7  $   25.8
Net Income                                          $  108.5  $  105.8
Basic Share Earnings
   Continuing Operations                            $   2.08  $   1.88
   Net Income                                       $   2.63  $   2.48
Diluted Share Earnings
   Continuing Operations                            $   2.06  $   1.86
   Net Income                                       $   2.61  $   2.46
Weighted Average Number of Basic Shares Outstanding     41.3      42.6
Weighted Average Number of Diluted Shares
 Outstanding                                            41.6      43.0

(1) "Discontinued Operations" consists of property sales, or intended sales, of certain lands and buildings that are material and have separately identifiable earnings and cash flows.


            Industry Segment Data, Net Income (Condensed)
          (In Millions, Except Per Share Amounts, Unaudited)

                               Three Months Ended   Nine Months Ended
                               ------------------  -------------------
                                 September 30,        September 30,
                               ------------------  -------------------
                                 2008      2007      2008      2007
                               --------  --------  --------  --------
Revenue:
------------------------------
Transportation
  Ocean Transportation         $  272.8  $  259.9  $  784.2  $  744.6
  Logistics Services              118.1     110.4     336.2     325.7
Real Estate
  Leasing                          26.2      26.3      82.3      81.5
  Sales                            77.2      78.5     295.8      85.4
  Less Amounts Reported In
   Discontinued Operations        (70.2)    (77.1)    (86.4)    (84.4)
Agribusiness                       37.5      37.3      96.2      93.0
Reconciling Items                  (3.0)     (2.4)     (7.1)     (6.2)
                               --------- --------- --------- ---------
Total Revenue                  $  458.6  $  432.9  $1,501.2  $1,239.6
                               ========= ========= ========= =========

Operating Profit, Net Income:
------------------------------
Transportation
  Ocean Transportation         $   31.4  $   38.6  $   84.7  $   96.5
  Logistics Services                5.1       6.0      14.4      17.2
Real Estate
  Leasing                          11.1      12.2      37.6      39.5
  Sales                            25.8      37.9      76.3      51.3
  Less Amounts Reported In
   Discontinued Operations        (27.3)    (37.1)    (36.4)    (41.7)
Agribusiness                       (6.7)     (3.2)     (6.8)      0.9
                               --------- --------- --------- ---------
  Total Operating Profit           39.4      54.4     169.8     163.7
Interest Expense                   (5.8)     (4.8)    (17.5)    (13.2)
Corporate Expenses                 (5.3)     (6.0)    (16.4)    (19.5)
                               --------- --------- --------- ---------
Income From Continuing
 Operations Before Income
 Taxes                             28.3      43.6     135.9     131.0
Income Taxes                        8.5      17.6      50.1      51.0
                               --------- --------- --------- ---------
Income From Continuing
 Operations                        19.8      26.0      85.8      80.0
  Discontinued Operations (net
   of income taxes)                17.0      23.1      22.7      25.8
                               --------- --------- --------- ---------
Net Income                     $   36.8  $   49.1  $  108.5  $  105.8
                               ========= ========= ========= =========

Basic Earnings Per Share,
 Continuing Operations         $   0.48  $   0.61  $   2.08  $   1.88
Basic Earnings Per Share, Net
 Income                        $   0.89  $   1.15  $   2.63  $   2.48

Diluted Earnings Per Share,
 Continuing Operations         $   0.48  $   0.61  $   2.06  $   1.86
Diluted Earnings Per Share,
 Net Income                    $   0.89  $   1.14  $   2.61  $   2.46

Weighted Average Number of
 Basic Shares Outstanding          41.3      42.6      41.3      42.6
Weighted Average Number of
 Diluted Shares                    41.5      43.0      41.6      43.0

                Consolidated Balance Sheet (Condensed)
----------------------------------------------------------------------
                       (In Millions, Unaudited)
----------------------------------------------------------------------

                                          September 30,  December 31,
                                          -------------- -------------
                                               2008          2007
                                          -------------- -------------

ASSETS
Current Assets                                   $  341        $  421
Investments                                         207           184
Real Estate Developments                             78            99
Property, Net                                     1,584         1,582
Other Assets                                        272           193
                                          -------------- -------------
    Total                                        $2,482        $2,479
                                          ============== =============

LIABILITIES & EQUITY
Current Liabilities                              $  264        $  322
Long-Term Debt                                      476           452
Employee Benefit Plans                               51            50
Other Long-Term Liabilities                          57            57
Deferred Income Taxes                               474           468
Shareholders' Equity                              1,160         1,130
                                          -------------- -------------
    Total                                        $2,482        $2,479
                                          ============== =============

Source: Alexander & Baldwin, Inc.