2008 Business Outlook
November 30, 2007
1
“Statements in this call and presentation that set forth expectations
or predictions are based on facts and situations that are known to us
as of today, November 30, 2007.
“Actual results may differ materially, due to risks and uncertainties,
such as those described on pages 16-22 of the Form 10-K in our
2006 annual report and our other subsequent filings with the SEC.
Statements in this call and presentation are not guarantees of future
performance.”
Disclosure
2
Earnings Summary, Performance & Trends
Economic and Market Outlook
Matson Outlook and Operating Priorities
Properties Outlook and Operating Priorities
Financial Summary
Q&A
Call Agenda
3
2007 Highlights
Full year guidance affirmed
Excellent year amid challenging environment
4
2008 Outlook
8 – 12 percent earnings growth targeted in 2008
Economic headwinds present operating challenges
Ample debt capacity
Prodigious cash flows from operations
create financial opportunities
Strategic and opportunistic investments
Return cash to shareholders through repurchases
5
2008 Headwinds
Slowing growth in Hawaii – but still growth
Commercial real estate robust
Real estate pricing maintained
Negligible direct sub-prime impact
Shipping activity plateau at high level
Extraordinary fuel cost increases
Fuel surcharge hedge in Jones Act markets
Recovery mechanism less effective in volatile markets
Credit market turmoil
Further credit crunch could have broad impact
6
2008 Volume/Capital Forecast
Transportation
7
Matson Navigation
Growth (%)
Hawaii WB containers
0 - 2
Guam WB containers
4 - 6
China EB containers
0 - 2
Autos
Flat
Matson Integrated Logistics
Total Volume w/o acquisitions
10 – 12
Capital Targets ($ millions)
Matson Navigation Maintenance
45
MIL Strategic/Growth
25
2008 Volume/Capital Forecast
Real Estate
8
Development Pipeline
Units
Keola La’i Unit Sales
356
Kukui’ula Unit Sales
40
Kai Malu Unit Sales
38
Leasing Portfolio
Portfolio Occupancy
96%*
* Based on current portfolio
Capital Targets ($ millions)
Pipeline Capital - Committed
80
Pipeline Capital - Uncommitted
35
1031 Exchange Capital
50+
Project X
50
2008 Operating Strengths
Multi-market diversification a true strength in
uncertain economic environment
9
Shareholder Value Objectives
10 – 12% long-term earnings growth target
Commitment to sustained dividend growth
Continued, opportunistic share repurchases
Focused investments in higher-value segments
Logistics
Guam/China trade
Commercial portfolio – reinvesting land proceeds
RE development
10
Earnings Summary, Performance & Trends
Economic and Market Outlook
Matson Outlook and Operating Priorities
Properties Outlook and Operating Priorities
Financial Summary
Q&A
Call Agenda
11
Local economy is forecast to be healthy and stable
2008 Annual Forecast Growth (%)
Visitor arrival growth 0.5
Visitor spending 3.7
Payroll job growth 1.7
Real personal income growth 2.2
Construction job count 1.0
Construction spending* 4.5
Unemployment rate 2.8%
Hawaii Economy
Data source: University of Hawaii Economic Research Organization
* Nominal contracting tax base
12
Hawaii Real Estate Outlook
Data sources: Colliers Monroe Friedlander, Bank of Hawaii,
First Hawaii an Bank
A&B Leasing portfolio property
A&B Development pipeline property
Maui
Oahu
Kauai
13
Commercial markets
Vacancy
Average
asking rent
Office
6.9%
$2.69 psf
Retail
3.5%
$3.20 psf
Industrial
2.2%
$1.19 psf
Residential markets
Excess inventory less problematic
than elsewhere – shortage exists
Honolulu median SFH price up 2.3%
in 3Q07, despite volume drop
Earnings Summary, Performance & Trends
Economic and Market Outlook
Matson Outlook and Operating Priorities
Properties Outlook and Operating Priorities
Financial Summary
Q&A
Call Agenda
14
2008 Priorities
Transportation
Core Business Profitability:
Increase yield on China cargo, limited volume growth
Manage capacity, costs and margin in Hawaii service
Guam uptick mirrors impending military build-up
Growth:
Internal and acquisitive growth at MIL in highway segment
Acquisitive growth at Matson Global
Leverage China success
15
Increase China EB Container Volume
Ships near capacity now, so volume growth limited
Increase service line profitability by
Growing top line by 7 – 10 %
Shift cargo/customer mix to
reflect full utilization
Seek rate increases in contracting
cycle, including bunker fuel surcharge
WB reload program – up to 85%
Growth:
Leverage early success, determine expansion direction
Core Business Profitability & Growth
China Service
16
Core Business Profitability & Growth
Hawaii Service
Manage Capacity & Revenues
Improve productivity with off-dock facility
Mokihana adds 120% Ro-Ro capacity, $2.5 million yield improvement
Neighbor island crane placement will improve stevedoring
Manage Costs
Fewer dry dockings (4 vs. 6)
Barges back in service - $3.0 million lower outside transportation
Manage Margin
Capture higher percentage of general rate increase
Match fuel surcharge with fuel prices
17
Core Business Profitability & Growth
Guam
Expand volume by 4 – 6 percent
Military ramp-up expected to continue
Container volume growth projected
to accelerate through 2012
Increase service line profitability
Top-line growth to exceed volume expansion
Infrastructure improvements required
Growth
Shoreside transportation/value-add services possible
18
Core Business Profitability & Growth
Matson Integrated Logistics
Expand volume by 10 – 12%
Market and share growth fuels increase
Acquisitions provide additional upside
Increase profitability
Margin compression expected, mitigated by shift
toward higher margin highway brokerage
Growth
Acquisitions critical to achieve higher targets
Matson Global acquisitions to provide benefits:
Cross-selling opportunities with MIL
Product line expansion
Links with real estate activities
19
Earnings Summary, Performance & Trends
Economic and Market Outlook
Matson Outlook and Operating Priorities
Properties Outlook and Operating Priorities
Financial Summary
Q&A
Call Agenda
20
2008 Priorities
Real Estate
Core Business Profitability:
Complete construction/sales at Keola La’i
Meet all other sales objectives in current pipeline
Focus on commercial property mix, mitigate tenant turnover
High-value property sales
Growth:
Complete/continue construction at key developments
Place over $200 million of capital to work
Expand commercial portfolio through property sales
21
Core Business Profitability & Growth
Real Estate Development – Sales & Capital
Keola La’i
First closings scheduled for 1Q08, all units close by YE
More than $220 million in revenue
$14 million in capital to complete project
Kukui’ula JV
40 units to be sold in 2008, $44 million in JV revenue
$130 million in construction activity planned
$40 million A&B capital commitment
Kai Malu JV
Project complete in 2008, $68 million in JV revenue
No additional capital required
22
Targeted Real Estate Investments
Development Pipeline
Ka Milo
Valencia
Bakersfield
Brydeswood
Port Allen
Kane Street
Kahului Town Center
Maui Business Park II
2010 and Beyond
2008
2009
Waiawa
Keola La'i
Kukui'ula (Res. and Comm)
Additional Wailea
Wailea MF-7
Wailea MF-19
Wailea MF-11
Kai Malu at Wailea
Current
Status
Entitled
Under construction
Sales Commenced
23
Real Estate Profitability & Growth
Leasing and Non-core
Profitability
Accelerate tenanting absorption
at Savannah
Favorably address limited lease
expiration exposure (< 9%)
Identify suitable disposition candidates
$50+ million 1031 exchange capital
Non-core property sales
Growth
$50 million Project X capital
Seek new geographic footprints aligned with strategic plan
24
Core Business Priorities
Agribusiness
Need to improve on disappointing
2007 sugar production levels
Shift to higher margin specialty
sugar sales will drive profitability
Ethanol not feasible at current
market prices
25
Earnings Summary, Performance & Trends
Economic and Market Outlook
Matson Outlook and Operating Priorities
Properties Outlook and Operating Priorities
Financial Summary
Q&A
Call Agenda
26
Additional Financial Disclosures
Joint Ventures
2006 10-K
Described asset
and earnings base
of Company
joint ventures by
Industry
February 2007
Income Portfolio
8-K Filing
Commercial
portfolio
supplementary
information packet
August 2007
Dev. Pipeline
Entitlement efforts,
acreage, units,
development
timing, capital
invested/projected,
sales status,
JV structures, etc.
Q1 2008
5-year Data
8-K Filing
Broke out asset,
capital and
depreciation figures
by Industry
Segment
April 2007
27
2008 Cash Flow*
$231 million swing in
FCF in two years as
Company realizes
benefits of prior
investments
2008 CapEx includes
growth capital, modest
maintenance capital
* Includes 1031 proceeds
and capital expenditures for
real estate classified as
inventory and investments.
28
2008 Capital Allocation Targets
29
2008F ($ MM)
Committed Capital
115
Maintenance Capital
75
Strategic/Growth Capital
115
TOTAL
305
Share Repurchases
TBD
A Commitment to Shareholders
Cash Returned to Shareholders (1998 – 3Q07)
30
($ millions)
Net Income
$882.9
Dividends
$382.5
Dividend Ratio
43%
Share Repurchases
$192.0
Total Cash Payout Ratio
65%
2008 Key Growth Targets
Operating Profit Growth YOY
31
2008F (%)
Matson Navigation
4 - 8
Matson Integrated Logistics
6 - 18
Real Estate Leasing
Negative to Flat
Real Estate Sales/Development
18 - 25
Agribusiness
Flat
TOTAL
8 - 12%
Q&A
Questions & Answers
32