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Hawaii's Most Profitable Companies 2012

First Hawaiian Bank is Hawaii's most profitable company and Bank of Hawaii is No. 2, both for the second year in a row

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Fuel Prices

Rising fuel costs in 2011 were a big drain on many local businesses, but, for some Top 250 companies, when fuel prices went up, profits did not go down.

For example, Hawaiian Electric Industries’ utilities generate most of their power by burning petroleum, but, as CFO Jim Ajello asserts, “Fuel costs do not affect profitability at our company whatsoever.” That’s because the conglomerate’s electric utilities on Oahu, Maui and Hawaii Island are able to pass increased fuel costs along to customers. Indeed, HEI’s net income soared to $138 million in 2011. That’s a $24 million increase, 96 percent of which came from its electric utilities.

Average Price of a
Barrel of Oil

About $20 million of that increase was due to rate increases at its Oahu utility, Hawaiian Electric Co., which were unrelated to fuel costs. That helped push HEI’s profit up from 7.8 percent of revenue to 9.2 percent in 2011. Moreover, most of that was paid in dividends. When you add in stock appreciation, HEI gave investors a total return of more than 21 percent in 2011.

Just as the increase in oil prices did not hurt HEI, it had little impact on Matson Navigation, which is now a separate company, but last year was a subsidiary of Alexander & Baldwin. Instead of having to absorb higher fuel costs, Matson imposed $73 million in fuel surcharges on its customers in 2011. Although the shipping company’s net income fell by $74 million from 2010, much of that was due to what it called “lower yields” on its China routes.

Even at Hawaiian Airlines, where fuel expenses exceeded wages and benefits in 2009 as the company’s largest single cost, the relationship between the price of fuel and profitability isn’t a straight line. CFO Scott Topping points out that HAL’s expansion has also increased fuel expenses. “Some of that was due to higher fuel price, but some was due to higher volume. You’d have to parcel that out to do a meaningful analysis.”

Hawaiian Air Numbers

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