IR News
Stock Price
Due for
Upswing
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1. November 2002 Business Performance
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HHI's sales came to £Ü7.2 trillion by the end of November, a 12.4% increase year on year. The Shipbuilding Division took almost half of all sales with £Ü3.41 trillion and other divisions followed, including Offshore & Engineering with £Ü1.13 trillion, Electro Electric Systems with £Ü812 billion, and Industrial Plant & Engineering with £Ü790 billion.
HHI has received orders totaling $4.19 billion as of the end of November. The Shipbuilding Division received orders for 50 vessels worth $2.02 billion (2.60 million GT) for the year, consisting of 18 containerships, 20 tankers, six bulk carriers and six others including special & naval vessels. Of these, four tankers, a product carrier and a special & naval vessel were ordered in the month of November. As of the end of November, the division had a total backlog of orders for 117 vessels worth $5.22 billion (7.2 million GT), including 55 tankers, 29 containerships, six bulk carriers and seven LNG carriers.
The Offshore & Engineering Division took orders worth $450 million as of end of November. The division has secured $1.2 billion in backlog orders, which is equivalent to 12 months of work. The division is certain of clinching a big order in December that will make up for its slow performance relative to its goal.
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2. Tanker Market Outlook
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On November 19, the Prestige, an aging single-hull oil tanker, broke into two parts off the Spanish coast near Portugal. Oil spilling from this ship contaminated the coastlines of neighboring countries. After this accident, the EU decided to prohibit single-hull oil tankers aged 15 years or more from carrying fuel oils (such as tar, bitumen or heavy crude), and barred them from operating within EU member countries' territorial waters. This has been a topic of much discussion, and the decision will formally take effect after each member country has made a public announcement about the matter. Along with this decision, the EU is said to be considering a boycott of all single-hull oil tankers in its member countries's territorial waters by 2010 (IMO made a decision on the forced phase-out of all single-hull oil tankers by 2015). The EU's current move is also said to include a bill that will subject all operating tankers to a maximum age of 23 years. It is expected that the shipbuilding market will recover from the current recession due to an increase in demand, along with a rise in the shipbuilding price of tankers.
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3. HHI's Stock Price
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During December, the KOPSI returned to the 700 mark after falling below 600 in October. HHI's share price slipped to a record year low at the end of September due to several unfavorable factors, such as fewer orders received, a decrease in backlog, and a drop in shipbuilding prices.
However, the share prices of all Korean shipbuilders, including HHI, are rising due to the stock market's stabilization, a turnaround in shipbuilding prices, an improved business environment, and expected demand for new tankers amid international pressure for the earlier scrapping of aging oil tankers.
In fact, HHI's share price rose more than 30% following the tragic accident of the Prestige. Industry analysts agree that the shipbuilding business will soon improve, and the share price of HHI, as the worldÕs largest shipbuilder, is expected to continue rising.
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4. Disposal of Hynix Shares
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In an effort to maximize the collection of investments in Hynix Semiconductor throughout the latter's normalization, HHI and Hyundai Group shareholder companies concluded a "Custody Agreement" and entrusted matters concerning Hynix's management rights, voting rights and disposal of shares to Korea Exchange Bank (KEB). They also put their shares under KEB's control as stipulated in the "Custody Agreement" signed with Hynix Semiconductor's creditors on June 14, 2002. Under the agreement, HHI and Hyundai Group shareholder companies must dispose of their shares between March 14, 2002 and September 13, 2003. Accordingly, HHI disposed of 10,314,000 shares on December 11, 2002 (30% of all Hynix shares that HHI owns), and plans to dispose of its remaining shares within the scheduled time period. The loss from the disposal will be entered as "Current term loss"in the company's Income Statement. However, the disposal will not affect HHI's financial structure, as the entire amount of the valuation loss had already been reflected in the Balance Sheet through a capital adjustment.
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5. Public Notice
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New Contract(Dec. 16, 2002)
* Project: Five 7,500-TEU
Containerships
* Contract Price: £Ü389,902,500,000
* Owner: Thirtieth Dragon Shipping
Inc. and 4 others
* Payment Terms: Cash
* Contract Date: Dec. 14, 2002
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