• Liftings increased by 14.7%.
• Turnover decreased by 4.4% to US$1,135 million.
• Profit before tax of US$4.1 million (US$54.7 million last year).
• Profit after taxation and minority interests of US$1.0 million (US$49.1 million last year).
• Earnings per share of US0.2 cent (US9.5 cents last year).
• No interim dividend declared
• Delivery taken under long-term charter of one new vessel of approximately 5,700 TEU in capacity.
• Property development projects progressed as forecast

Orient Overseas (International) Limited ("OOIL") Group today announced a profit before taxation of US$4.1 million compared with US$54.7 million for the same period last year. After taxation and minority interests, the Group reported a profit of US$1.0 million, a decrease of US$48.1 million from the US$49.1 million earned during the first half of 2001.

OOIL Chairman and Chief Executive Officer, Mr. C C Tung, said "The dramatic fall in overall performance has been due almost entirely to a severe deterioration in the comparative performance of the Group's core international containerised transportation business. It was the result of the very steep drop in the general level of freight rates resulting from the significantly adverse changes in the balance between the rates of growth of container volumes carried and the introduction of new tonnage into service".

"The slowdown in the world's economies had its greatest impact upon the industry from early 2001 onwards as it coincided with the almost unprecedented increase in the rate of delivery of newbuilding container vessels. Whilst rates have indeed fallen significantly, the growth in container volumes carried has been at a somewhat higher rate than first forecast. On the Trans-Pacific routes to the U.S. West Coast, for example, while our total liftings have increased by 17.1% during the first six months of 2002, as compared with the same period last year, average revenues per TEU have fallen by 15.8%. Our organic growth plans have been met on all our trade routes except by the Asia to Europe trades on which we experienced a 3.7% fall in total liftings for the first six months of 2002 as compared with last year," added Mr. Tung.

"Our terminal operations have enjoyed mixed fortunes during the first half of 2002. Both Deltaport and Vanterm in Vancouver have benefited from increased throughput resulting in performances significantly ahead of budget. However, the competitive situation and current overcapacity in the Port of New York and New Jersey has led to below budget performances by our Howland Hook Terminal on Staten Island and Global Terminal in New Jersey," Mr. Tung said.

"The Group's property investment and development businesses have continued to perform well during the first half of the year. Our investment property, Wall Street Plaza, in the city of New York has produced a result ahead of budget. In Shanghai, the strong residential housing market has resulted in a performance by our property development activities ahead of budget for the period. Selling prices for our Century Metropolis project on Ziyang Lu have strengthened and Phases 1A and 1B are now either handed over or virtually 100% presold and the sales programme for Phase 2A is to begin shortly," said Mr. Tung.

"The high rate of newbuilding deliveries remains a problem for the industry. It will require strong economic growth, both in the U.S. and Europe, and a consequent strong growth in container volumes, to carry us through until this current surge in the deployment of new tonnage begins to abate. To date however, there are few if any signs that rates will recover in the short term to a level anywhere near sufficient to allow profitability to return to the levels of the past few years. The caveats most definitely remain therefore and if these modest rate improvements serve only to encourage a further spate of newbuilding orders then, in common with the remainder of the industry, we will have little better to look forward to over the coming few years," commented Mr. Tung.

"In this environment of weak freight rates we remain as a Group, concentrated as before upon the improvement in efficiency as part of our continuing efforts to drive down both fixed and variable costs. We will also remain focussed on mainland China as our growth market and the one in which we have an established expertise and reputation", concluded Mr. Tung.

During the period, the Group took delivery under long-term charter of one new container vessel of approximately 5,700 TEU. The Group is expecting the delivery of one ice-strengthened vessel of approximately 4,100 TEU and six vessels of approximately 7,700 TEU each during 2003 and 2004.

OOIL continues to maintain a prudent financial position, with a strategic goal of maintaining a net debt equity ratio of less than 1.0. Nicholas Sims, the Group Chief Financial Officer said that the Group's net debt to equity ratio at 30th June 2002 has been maintained at the 2001 year end level of 0.6.

The Board of Directors has decided not to declare an interim dividend as a reflection of the lack of meaningful profits recorded for the period and the uncertain market conditions to be faced for the remainder of the year.

OOIL owns one of the world's largest international integrated containerised transportation businesses and trades under the name OOCL. Its investments are principally in international containerised transportation, container terminal operations, commercial property in New York, business interests in the People's Republic of China and portfolio investment securities. With more than 160 offices in 50 countries the Group is one of Hong Kong's most international businesses. OOIL is listed on The Stock Exchange of Hong Kong Limited.

* * *

ORIENT OVERSEAS (INTERNATIONAL) LIMITED

(Incorporated in Bermuda with limited liability) 

INTERIM RESULTS

The Directors announce the unaudited consolidated results of Orient Overseas (International) Limited as set out below:-