• Increase in total liftings of 13% 

• Group turnover growth of 3% 

• Profit after tax drops by 16% to US$51.7 million 

• Two new vessels ordered for delivery in 2005 

• Property developments continue to produce profits 

• Final dividend of US2.5 cents (HK19.5 cents)

Orient Overseas (International) Ltd ("OOIL") today announced a profit after taxation and minority interests of US$51.7 million for the year ended 31st December 2002, a 16% decrease against that recorded for the corresponding period in 2001. The Directors are recommending a final dividend of US2.5 cents (HK19.5 cents). The recommended final dividend of US2.5 cents (HK19.5 cents) maintains the dividend at the same level as was paid for the year of 2001 as a whole.

"The performance for the year of 2002 as a whole has turned out to be much better than expected. In my statement on 16th August 2002 in the Interim Report, I referred to the first half of 2002 as having been one of the worst business environments in the history of the industry but I also intimated that at that time there were some signs that, for our core business of containerization transportation, the imbalance between supply and demand was beginning to right itself. This indeed proved to be the case," said Chairman and Chief Executive Officer Mr. C C Tung.

"Container volume growth in 2002 exceeded all expectations and the introduction of new tonnage into service was at a lower rate than forecast. During the second half of 2002 therefore, better utilization rates led to stronger freight rates as the availability of space tightened. All trade routes experienced improvements in performance during the course of 2002 as volumes increased significantly and freight rates began to firm. Overall, on a 4% improvement in the load factor, the Group recorded total revenue growth of 3% on a 13% increase in total liftings but against a 9% drop in the underlying average revenue per TEU."

During the year, the Group took delivery of a new vessel of 5,500 TEU under long-term charter. The Group also ordered two further 8,000 TEU "SX" class new vessels for delivery in 2005. Including the seven vessels ordered in 2000 and 2001, the Group has in total nine new vessels to be delivered in 2003, 2004 and 2005. The Group's container terminal businesses in North America enjoyed mixed fortunes in 2002 as they had in 2001. Overall, the four terminals, two in New York and two in Vancouver, achieved a 3.9% increase in throughput. However, both the volume growth and performance varied significantly between the individual operations. In Vancouver the two terminals, Vanterm and Deltaport, performed commendably and achieved a combined increase of 26% in throughput, in terms of actual lifts, and a 75% improvement in operating profits. In New York, our terminal at Howland Hook has now begun to reap the benefits of the management changes we made in late 2001. For the year 2002, and for the first time albeit in its relatively short history, it has made a meaningful contribution to Group profits on a total throughput much unchanged from 2001. On the other hand however, Global Terminal in New Jersey experienced a very difficult 2002. I mentioned last year that due to bankruptcy it had lost one of its two major customers and this unfortunately was followed in 2002 by the loss of its other major customer as a result of the exercise in the rationalisation of services undertaken by many of the major liner companies during the early part of last year. As a consequence, Global Terminal experienced a near 60% fall in throughput thereby producing a negative result for the year.

During 2002 we have continued the development of our automated IT platforms. CargoSmart, the award winning neutral portal developed by us for the container transportation industry, is designed to allow customers faster response times and self-directed and automated services providing better cost efficiencies. Today, it is employed daily by over 5,000 different companies and currently holds over 800,000 managed shipments. Internally, we continue to enhance our award winning object-oriented enterprise system, IRIS-2. It remains the driver within the organisation towards the continuing improvement of our products and services for the benefit of our customer base as a whole. It also continues to provide us with greater business efficiencies and cost savings which have become evermore crucial as a result of the difficult economic conditions of 2002.

OOCL Logistics, previously operating under the CargoSystem banner, sustained high double digit growth during 2002 by providing innovative freight management services and leading edge IT solutions to its diverse and growing number of customers.

Our Property Development and Investment division enjoyed yet another good year in 2002. Our development projects in Shanghai benefited again from the increasingly active and rising residential real estate market. During the year, we continued our efforts to maximise the returns from our existing projects, to source new projects and, even more firmly, to consolidate what is already a profitable business unit. We believe that this has already largely been achieved and the reputation of Orient Overseas Developments Ltd ("OODL") in Shanghai yet further enhanced. At the operational level, Wall Street Plaza performed less well than it had in 2001. It began 2002 with a 100% occupancy rate and with the vast majority of its rentable space leased through until 2004. However, as I had last year intimated might happen, one major tenant, under Chapter XI protection, handed back a significant proportion of the lettable space. This had an obvious effect upon the performance for the year but nevertheless the return from this investment remained healthily positive although below budget. Last year we took the prudent measure of writing down the book value of this investment property and, as a result, we have been able to leave it unchanged for this year.

"This year I can certainly be a little more confident of our overall performance than I was last time. Although there are some conflicting indicators, the recovery of the US economy appears to be entrenched if at a modest pace. While the measures of consumer confidence reflect some volatility the actual levels of consumer demand for imported goods have of late remained relatively strong. It is of course the levels of domestic consumer spending and the behavior of the consumer which has by far the greatest direct impact upon container volumes. There are therefore a number of issues which could seriously impact upon our business this year and about which we must be concerned. The geopolitical climate around the world is perhaps more fragile right now than it has been for a long time. The continuing conflicts centred on the Middle East cause uncertainty and trepidation in the global economy and serve at the very least to destabilise consumer markets throughout the world. This, combined with the troubles in Venezuela, has served to push up the price of oil significantly which, in addition to inflating our cost base through much higher bunker prices, now has the potential to exert recessionary pressures on the major world economies. More directly, we must also continue to be conscious of the delicate supply and demand balance between container volumes and new tonnage deployment in the major container trades in which we operate," concluded Mr. Tung.

Nicholas Sims, the Group Chief Financial Officer, said that the Group's net debt to equity ratio as at 31st December 2002 was improved to 0.56, compared with that of 2001, and it remains one of the Group's strategic goals to maintain this ratio at a level below 1.0. Sufficient resources have been set aside to ensure that no undue burden is placed upon the Group's financial position as new vessels are delivered over the next few years.

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 of businesses. OOIL is listed on The Stock Exchange of Hong Kong Limited.

CONSOLIDATED PROFIT AND LOSS ACCOUNT

For the year ended 31st December 2002