Orient Overseas (International) Ltd
Announces 2011 Full Year Results

• Group Revenue decreased by 0.4% to US$6,012 million
• Profit After Tax from Continuing Operations of US$139 million
• Profit Attributable to Equity holders of US$182 million
• Earnings per share of US29.0 cents

• Lifting increased 5.6% to 5 million TEU
• Delivery taken of two 8,888 TEU new-build vessels
• Operating capacity rose 8.3% to 415,790 TEU
• Load factor was 76% in 2011 versus 81% in 2010

• EBIT margin decreased from 18.5% in 2H10 to -0.2% in 2H11
• Lifting rose by 2.2% from 2.54 million TEU in 2H10 to 2.59 million TEU in 2H11
• OOCL revenue per TEU decreased from US$1,217 in 2H10 to US$1,075 in 2H11
• Load factor was 75% in 2H11 versus 79% in 2H10

• Total net debt to equity ratio was 0.06: 1 at end of 2011
• Liquid assets exceeded US$2 billion as at 31st December 2011
• Net debts of US$259 million as at year end of 2011

Orient Overseas (International) Limited and its subsidiaries (the “Group”) today announced a profit attributable to shareholders for 2011 of US$181.6 million, compared to a profit of US$1,866.8 million in 2010 which included the US$1,004.6 million profit on the sale of the Group’s former PRC property development business.

With the lack of profit in OOCL in the second half of 2011 and the difficult trading environment expected in 2012, the Board of Directors is not recommending payment of a final ordinary dividend for 2011.

The Chairman of OOIL, Mr C C Tung, said, “While we started 2011 believing that the extremes of 2009 and 2010 were behind us and that we had a period of steady growth ahead, trading conditions in the container transportation industry over the past year became increasingly difficult. While overall global demand levels grew, the slow rate of economic growth in the United States and in Europe saw only muted volume growth for container trade to those markets. Demand growth proved inadequate for the orderly absorption of new-build capacity that delivered during the year.”

OOCL lifting increased 6% year-on-year. The peak cargo moving season was brief with only a moderate increase in volume in July and August. Average revenue per TEU was 7% lower overall for the year, mainly due to a 29% erosion in freight rate levels from Asia to Europe.

“OOCL’s operating profitability was impacted by the downwards pressure on freight rates that intensified over the second half of the year. The traditional Trans-Pacific peak season in the third quarter was disappointing in terms of both volume and prevailing freight rates. While normal competitive pressure was felt across all trades as carriers sought to maintain market share while absorbing increased capacity, the Asia-Europe trade saw extraordinary freight rate declines. With the continued high price of bunker fuel also squeezing margins, the need for greater operational efficiency saw new alliances formed for Asia-Europe, including a group of six carriers to be called the “G6 Alliance” of which OOCL is a founding member,” noted Mr. Tung.

“Despite 2011 representing a period of consistent deterioration in profitability for the industry, OOCL has made progress on many strategic fronts including the order of ten 13,200 TEU energy efficient ships and substantial progress on the development of IRIS4 as our next generation operating system. The ordering of the 13,200 TEU vessels confirmed OOCL’s ongoing role as a global network carrier, and its long-term commitment to the Asia-Europe trade in particular. These vessels, when delivered in 2013 and 2014, will further enhance OOCL’s competitive cost base as well as helping us to reduce emissions consistent with our focus on and promotion of environmental protection,” Mr. Tung continued.

In view of the rising fuel price during 2011, OOCL focused intensely on its bunker saving programs. These programs included initiatives covering technology, optimal routeing, continuously optimized speeds, minimum ballast, optimal trim, and ensuring close communication between ship and shore colleagues regarding berthing arrangements and terminal productivity. The key contributor to the success of these programs has been the excellent coordination between OOCL’s crews, regions, service centres and corporate departments.

“Looking to 2012, we expect trading conditions to continue to be difficult. The major markets of North America and Europe are likely to see low levels of demand growth given the slow economic growth in those economies. Scheduled new-build capacity delivering in 2012 exceeds that of 2011, and is again dominated by the large vessels destined for deployment on the Asia-Europe trades. While there has been some freight rate improvement on both Asia-Europe and Trans-Pacific routes since the beginning of this year, freight rates for those trades do not yet fully cover costs especially given the increase in the cost of bunker fuel that has occurred,” Mr. Tung continued.

OOCL continued to operate the Long Beach Container Terminal in California and the Kaohsiung Container Terminal in Taiwan, with a total throughput of 1.7 million TEU in 2011. OOCL also have a 20% interest and management participation in the Tianjin Port Alliance International Container Terminal Co., Ltd. and the Ningbo Yuandong Terminal Ltd., with a combined throughput of 3.9 million TEU.

“While uncertainty about the world economy will definitely present a challenge to us this year, we will continue to invest for our future competitive advantage. In addition to the 13,200 TEU vessels that we have on order, we have more recently agreed a new 40-year lease with the Port of Long Beach for the Middle Harbor terminal that we use in Long Beach. With the new lease, we are joining with the Port of Long Beach in undertaking a major redevelopment of the terminal. The nine year project will combine and expand two aging shipping terminals into one modern terminal to improve cargo-movement efficiency and environmental performance. While the major part of the cost of the redevelopment rests with the Port, OOCL will be progressively investing in new terminal equipment over the period of the redevelopment. The new terminal will be one of the first to be completed in line with the emerging trend in US west coast terminals of higher levels of automation, needed to keep such terminals competitive as gateways to North America,” Mr. Tung said.

“Despite the poor performance in the second half of 2011, the Group remains operationally robust and well placed for the future with its alliance memberships and investment for growth. Our Group is financially strong, is well capitalised, and has sufficient liquidity and access to funding to meet its future needs. Our outstanding staff continue to be a key element of our superior performance and success, and through their continued efforts, together with our strong financial position, we are confident of our ability to continue developing our business and meeting our goals,” Mr. Tung concluded.

Mr. Kenneth Cambie, the Group Chief Financial Officer, commented, “As at 31st December 2011, the Group had total liquid asset balances of US$2,413.1 million compared with debt obligations of US$439.1 million repayable in 2012. Debt to equity ratio changed to 0.06: 1 at end of 2011 from a net cash position at end of 2010.

OOIL owns one of the world’s largest international integrated container transport businesses which trades under the name “OOCL”. With more than 270 offices in 60 countries, the Group is one of Hong Kong’s most international businesses. OOIL is listed on The Stock Exchange of Hong Kong Limited.

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Issued by: Orient Overseas (International) Limited

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