March 2003 Business Performance

As of the end of March, HHI won orders worth $2.4 billion in total. The Shipbuilding Division took orders for 37 ships worth $1.8 billion (2.7 million GT), achieving 60% of the target for the entire year ($3 billion). By ship type, crude oil carriers (20) and containerships (16) made up a major portion of these orders. Currently, the Shipbuilding Division maintains a total order backlog of 147 ships worth $6.8 billion (9.6 million GT), sufficient workload for the next two March 2003 Business Performance and a half years.

Meanwhile, the Offshore & Engineering Division won an order from China Petroleum and Chemical Corp. (SINOPEC) on Feb. 22, 2003 to construct an offshore pipeline worth $120 million on a turnkey basis, a major first step toward achieving the target of $1.5 billion for 2003. The Construction Equipment Division has achieved continuous business growth since the second half of 2001. As of end of March, the division posted excavator sales of 2,103 units worth $145 million in the Chinese market, while maintaining its dominant market share of 25.5%.

Shipbuilding Market Outlook

The outlook for the shipbuilding market in 2003 appears bright, considering that HHI¡¯s recent orders were already under negotiation before the Prestige accident.

International regulations for early replacement of existing single-hull tankers and aging vessels have been intensified under environmental considerations in the post-Prestige era.

That accident has led to considerable rises in shipbuilding prices and a positive outlook for the tanker market. However, the shipbuilding market has yet to shake off uncertainties in 2003 such as the worldwide economic slowdown, the aftermath of the war in Iraq, the threat of North Korea¡¯s nuclear programs and high oil prices. Nevertheless, the shipbuilding industry is expected to enjoy solid growth this year on the strength of momentum from the rising trend in shipbuilding prices and increasing restrictions against singlehull tankers in EU countries. Given the sufficient order backlog of the Shipbuilding Division, HHI¡¯s operations are stabilized, enabling the company to be more selective in taking future orders.

General Meeting of Shareholders

HHI¡¯s 29th General Shareholders¡¯ Meeting was held at Hanmaeum Center in Ulsan with 519 shareholders (representing 41.59% of common stocks with voting rights) on March 14, 2003. Five agenda were submitted at the meeting: (1) Approval of the FY2002 financial statements, (2) Amendment to the Articles of Incorporation, (3) Appointment of outside directors, (4) Selection of Audit Committee members and (5) Approval of the ceiling on remuneration for directors.

On agendum (1), the Company reported sales revenue of £Ü8,134.1 billion, operating profit of £Ü454.5 billion, recurring profit of -£Ü322.3 billion and net income of -£Ü245.4 billion in FY2002. On agendum (2), the Company newly established an appropriation limit for third parties, adopted a performance-oriented stock-option system and clarified the basis for issuance of CBs. On agendum (3), four outside directors were appointed. On agendum (4), three of the four outside directors were selected as Audit Committee members. Finally, on agendum (5), the ceiling on remuneration for directors was raised from £Ü2 billion to £Ü3 billion.

At the meeting, senior management answered shareholders¡¯ questions sincerely. The shareholders expressed their strong support and encouragement concerning the Company¡¯s efforts for transparency in overall business operation following its disaffiliation from the Hyundai Group. All agenda submitted were approved unanimously.

HHI¡¯s Stock Price

After recording a low for the year of £Ü16,200 on March 10, HHI¡¯s stock price rose over 50% in one month to £Ü24,600 on April 21. As global tension eases somewhat with the USIraq war coming to an early end and negotiations on North Korean nuclear issues underway, HHI is enjoying favorable market conditions. We believe the current stock price reflects the dissolution of considerable risks involving previously affiliated firms that had long impeded the recovery of HHI¡¯s stock price. Hereafter, HHI stock is expected to maintain its current upward trend. In particular, the resolution of uncertainties in non-business fields is anticipated to have a positive affect on HHI¡¯s stock revaluation.