May 2003 Business Performance

As of the end of May, HHI posted relatively favorable results, winning a total of $3.64 billion worth of orders for a 91.6% year-on-year increase and 49.8% of the target set for this year. The Shipbuilding Division has won orders for 50 vessels worth $2.54 billion (3.6 million GT in total), up 202.6% year-onyear from $840 million and 83.5% of the division¡¯s target for 2003. This robust performance is attributable to the current recovery of business in the global shipbuilding industry.

By type of vessel for which orders were received during the first five months of 2003, 22 are tankers and 26 are container ships, accounting for 96% of total orders. The present trend is toward larger and more profitable vessels, with three VLCCs among the orders for tankers and sixteen 5,000TEU or larger ships among the orders for 26 container vessels. Thus, the division currently has 150 vessels in its orderbook (63 tankers, 55 container ships, 6 bulk carriers, 6 LNG carriers, 11 special & naval vessels and 9 others) of 10 million GT in total, which will keep the Company¡¯s operation stable for another two and a half years.

In May, the plasma automatic welding technique and related equipment developed by the Company in March 2002 after two years of research were certified by major international classification societies and engineering firms. A welder using the new technique for stainless tank welding work, a core process in building membrane-type LNG vessels, can proceed two times faster than using existing TIG welding methods. It is expected that the development of the new technique and equipment will open a new chapter in the construction of LNG carriers in terms of both quality and productivity. Being a builder of both membrane- and moss- type LNG carriers (and record-holder for building the largest number of LNG carriers in Korea, 10 vessels in total, and the first Korean LNG carrier builder for domestic and overseas clients), the outlook for the Company¡¯s winning future orders in the LNG market continues to be very bright. The Construction Equipment Division continues to post rapidly increasing orders in overseas markets (up 72.6% from the same period of last year) on the strength of robust business in China. With an annual target of £Ü600 billion in sales for 2003 (19% higher than £Ü506 billion in 2002), the division has already reached 60% of its goal as of the end of May and anticipate continued growth in the second half. It is expected that business in China will continue to grow, with extraordinary demand for construction equipment in connection with the 2008 Beijing Olympics.

Enhanced Financial Structure

As of the end of May, HHI¡¯s total outstanding debt stood at £Ü2.57 trillion, reflecting a £Ü920 billion (24.2%) decrease (including retirement of treasury bonds worth £Ü110 billion) from £Ü3.49 trillion at the end of 2002. This improvement is part of a broader plan to decrease total outstanding debt. The Company continues striving to enhance corporate value through improvement of its financial structure and reduction of financial expenses, utilizing its mounting cash liquidity to reduce overall debt load.

HHI¡¯s Stock Price Comments

The KOSPI reached the 690- point mark despite initially pessimistic forecasts at the beginning of the year. The current stock market rally in Korea is attributed to the removal of economic uncertainties in line with the rise of the US stock market, and to growing signs of improvement in fundamentals. Foreign investors are likely to remain net buyers in anticipation of a general business recovery from the second half of the year, providing momentum for a continued rise in stock indices. HHI¡¯s stock price is expected to increase due to the upward adjustment of its corporate bond rating from ¡°A-¡± to ¡°A¡± by

Korean credit-rating agencies, who have viewed favorably the Company¡¯s improved financials, brisk business performance and disposition of all non-performing equities.

Public Notice

1. Subject:
Acquisition and retirement of treasury bonds
2. Details:
1) Purpose: Reduction of financial expenses through acquisition and retirement of treasury bonds
2) Acquisition of treasury bonds : £Ü110 billion
3. Method of Acquisition: Direct purchase from the market
4. Date of Acquisition: May 26, 2003
5. Date of Retirement: May 30, 2003