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Goldbelt feels the economy, weather

Tourism, contracting revenues down, but Native corp. remains a profitable entity

Posted: May 9, 2012 - 12:02am
Goldbelt, Inc., says last summer's bad weather kept people from riding the Mount Robert's Tramway and lowering their profits.  Michael Penn / Juneau Empire
Michael Penn / Juneau Empire
Goldbelt, Inc., says last summer's bad weather kept people from riding the Mount Robert's Tramway and lowering their profits.

Profits are falling at Goldbelt, Inc. Juneau’s urban Native corporation, resulting in the slashing of the shareholder dividend.

Revenues and profits fell at both Goldbelt’s locally prominent tourism business, and its financially important government contracting business as well.

In Juneau, a second year of bad weather limited the number of tourists riding the Mount Roberts Tramway, said Bob Loiselle, CEO of Goldbelt Inc.

“It was a wet, rainy summer,” he said. “That discourages folks from going up, which impacts our revenues.”

The multi-million dollar tramway brought in $750,000 less than expected in revenue, resulting in a loss of $200,000 for the year, the company said.

Overall, Goldbelt’s income for 2011 dropped to $2.3 million from $2.4 million in 2010.

Total revenues for the year declined from $139.5 million in 2010 to $135.2 million in 2011, according to the company’s recently published annual report.

Goldbelt during the year slashed its dividend, which had been growing steadily, from $3 per share to $1.50

That saved the company about $400,000 it would have paid out to shareholders.

Loiselle, who joined Goldbelt in January, said he didn’t know the reason the dividend had been reduced.

Another local tourism operation, the Goldbelt Hotel also had a difficult year, but did turn a profit, the company said.

The hotel continues to feel the impact from the loss of Cruise West, a small cruise line that ran tours departing from Juneau. Cruise West’s business once provided half of Goldbelt’s summertime business.

“The Goldbelt Hotel is doing a decent job recovering from the loss of a major client,” the company said.

Goldbelt also ended its involvement in Mendenhall Lake and River canoeing excursions done by a subsidiary called Auk Ta Shaa Discovery, LLC.

Goldbelt sold its ownership interest in the company for $430,000, and recognized a loss for the year of $139,000.

Loiselle said he was unfamiliar with the decision to close that operation.

“Management at the time felt it was an appropriate thing to do,” he said.

The company’s annual report did not provide profit specifics for another local operation, Goldbelt Security Services, but said it had $1.56 million in revenues and a “respectable” year in 2011. It provides crossing guards and security patrols at Kensington Mine, Juneau International Airport and elsewhere.

Goldbelt’s largest, but less visible, business focus is in government contracting under the federal Small Business Administration’s 8(a) minority small business program. Under that, Goldbelt’s companies can get small-business preferences for government contracts.

That program has been under fire nationally, but Loiselle said a bigger challenge has been increased competition for declining federal dollars.

During 2011 contracting revenues slipped, but it remained a profitable line of business, he said. While contracting didn’t achieve its budget expectations, it did contribute 4 percent more in net operating income than the previous year, the company said.

Among the services provided by 14 subsidiaries with 8(a) certification are construction, facilities management, technical staffing, medical staffing, vehicle and equipment leasing an others. Some provide value-added procurement, where they act as a purchaser but also do installation and modification of what they’re providing.

The annual report warned that some of those business lines had low barriers to entry, and that new competitors can drive down profit margins.

“To the extent you get work, it’s probably at lower profit margins,” he said.

Loiselle said he was “cautiously optimistic” about 2012 profits.

The 8(a) companies will continue to do well, he said.

“We are looking at a solid year this year, hopefully better than last year,” he said.

After two summers during which Juneau weather was bad, and then worse, Loiselle said he’s hoping tourism will turn around as well.

“We think it will get better, but it will depend somewhat on the weather,” he said.

Goldbelt also owns significant land holdings in the area. The company is trying to develop Cascade Point into a ferry launch area to serve the Kensington Mine, he said.

Two longer-term land developments include possible new housing on its Douglas Island holdings, and a hoped-for tourist destination at Hobart Bay, where Goldbelt owns thousands of acres.

Goldbelt shareholders will meet June 2 in Juneau for the company’s annual meeting, for further discussion of company issues.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com

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