Global Shipbuilding Leader
with Highest Backlog

HHI Sets sights on creating "Blue-Ocean"
to be a global heavy industry company

Hyundai Heavy Industries ranked first with 1,079 CGT (Compensated Gross Tonnage), according to a list of backlogs announced by the world's leading shipping service provider Clarkson of UK, unveiled at the end of 2005. Hyundai Mipo Dockyard placed fourth with 394 CGT and Hyundai Samho Heavy Industries ranked fifth, registering a feat of putting all three companies of the HHI Group on the global top 5 list.
HHI chalked up 10,354.4 billion won in sales last year, a 14 percent increase over the previous year, breaking the 10 trillion won sales barrier for the first time since its founding. Thanks to a boost in productivity and a rise in the portion of added-value vessels, HHI posted 90.8 billion won in operating profit and 183 billion won in net profit during 2005, a 398.6 percent jump over the previous year. All of the company's business divisions registered a relatively good performances last year, compared to the previous year, and the shipbuilding division, which takes a lion's share in HHI sales, has focused on added-value vessel orders instead of low-priced ships, bringing about an expansion of profits, HHI officials said.
HHI is forecast to land $16.1 billion worth of shipbuilding orders, riding on the booming shipbuilding industry this year and to secure a stable backlog in the next three years, they said. The company posted $7.49 billion worth of exports, recording another feat of winning the $7 billion Export Tower last year in two years after winning the $5 billion Export Tower during the 2003 anniversary of Trade Day.
The shipbuilding division was recognized as "The World's Best Shipbuilder"for the 23rd straight year as three vessels, built by HHI, was nominated as "The World's 2005 Excellent Ships"by a global prominent shipping magazine last year. HHI demonstrated its technological prowess and capabilities in shipbuilding of added-value vessels as it won an order for four 10,000 TEU-class containerships, dubbed the "Dream Containership,"from China's COSCO for the first time in the world. The company has fortified its top position in the global shipbuilding industry as it has already secured a backlog of more than three years by landing orders of large-size tankers, LNG carriers and LPG carriers successively at the same time. In an effort to relieve a site shortage, caused by the rising backing, HHI dedicated a shipbuilding block plant in Pohang and secured an additional 100,000 pyeong (330,000 sq. meters) site for shipbuilding.
The marine business division demonstrated a feat of posting a record high of $2.4 billion worth of orders, including the $1.3 billion AKPO FPSO project in Nigeria it won from TOTAL of France.
Despite several unfavorable conditions arising from business stabilization efforts, the plant business division established a bridgehead for its full-fledged entry into Africa and the Middle East as it landed large-size project orders, including an $800 million gas facility project it jointly won with other divisions. The division also entered the Chinese market by dedicating a boiler plant in Shandong.
HHI has put more energy into securing new and core technologies needed to enhance products'edge as it has pushed four priority projects for technology development. Thanks to these efforts, HHI ranked third among Korean companies in a list of the World-Best Products, designated by the Ministry of Commerce, Industry and Energy. The company has a competitive edge in other business areas on top of the shipbuilding sector.

BUSINESS PLAN ― HHI aims to post 12.8 trillion won in 2006 target sales, a 20 percent increase on a year-on-year basis with the goal of building a foundation for its leap into a global leader. The target sales figure breaks down to $7,186 million in the shipbuilding division; $2 billion in maritime business; $1,411 million in plant business; $1,398 million in engine and machinery; $1,160 million in electric and electronics systems; and $1,442 million in construction equipment. The company has established an aggressive business plan calling for investing 439.8 billion won in facility outlays and 150 billion win in R&D investments in a bid to prepare itself for the future despite unfavorable business conditions.VISION OF 'GLOBAL LEADER'― HHI has established long-terms development plans and strategies with a view of realizing its vision of developing HHI as a global leader. By inheriting and evolving the pioneering spirit of the late founder Mr.
Chung Ju-yung, HHI is striving to create new values as a leader of the global heavy industry by meeting the demands of clients, providing satisfaction to employees and enhancing the value for shareholders.
'BLUE-OCEAN STRATEGY'― The domestic shipbuilding industry, ranked in the No. 1 position in the global market, is setting its sights on creating the "Blue-Ocean,"new and uncompetitive markets. HHI, which ranks first in the global shipbuilding market, launched a crude oil carrier in January last year after building the vessel on the ground because of the failure to meet dock facility demands arising from the rising backlog. The 15,000 ton-class crude oil carrier Novoship of Russia made a voyage for Chile at a speed of 14.6 knot (some 27km/h), becoming the first ship built on a land dock and setting a new record in the shipbuilding history.
It was in October 2004 that HHI succeeded in introduced the "on-ground build"method to shipbuilding, thus raising remarkably its shipbuilding capability and aptly cope with a rise in shipbuilding backlog. The new shipbuilding method is an innovative one, designed to surmount a limit of orders, caused by the dock size, in which the whole hull is constructed on the ground, then it is transported to the open sea by a barge before the vessel is set afloat.
HHI has so far landed orders on constructing 23 ships via the on-ground building method ― 10 from Vovoship; four vessels form Teekay of Canada and 7 LPG carriers. The company has already delivered six vessels. nw

(from left) A hull is being built on the "on-ground build) method.; an aerial view of the HHI shipyard.; and HHI's vast dry-dock

(left) HHI Vice Chairman & CEO Min Keh-sik and President Choi Kil-seon