• OOIL records 16% growth in Revenue
• Core Operating Profit (excludes Wall Street Plaza’s revaluation) of US$413.3M in 2008
• Profit after Tax of US$275.5M
• Propose Dividend of US4.5 Cents (HK$0.35) Per Share

• Group turnover increased by 16% to US$6,545 million
• Profit attributable to shareholders was US$272 million for the year, compared to US$2,547 million for 2007
• The 2007 result includes the net gain of US$1.99 billion from the sale of terminals division to Ontario teachers’ pension plan
• EBITDA from core operations was US$610 million, a drop of 29.8% over the 2007 EBITDA of US$869 million (before revaluation of the Wall Street Plaza)
• The fair value loss for Wall Street Plaza for the full year was US$25 million, while no fair value change was recorded in 2007
• Earnings per share in 2008 was US43.5 cents versus US88.3 cents in 2007 excluding
  discontinued operations
• Directors recommend a final dividend of US4.5 cents (HK$0.35) per share

• Total Equity increased by US$230 million in 2008
• Liquid Assets exceed US$2.0 billion as at 31st December 2008
• Net Debt of US$295 million as at year end.

*    Revenue from OOCL Only 

Delivered : 3 new vessels of 4,578 TEU capacity (OOCL BUSAN, OOCL TEXAS and OOCL PANAMA)

• Wall Street Plaza’s occupancy rate was 90.1% at the end of 2008
• Double Tree Hotel by Hilton in Kunshan was completed in 2008 and was opened in January 2009

Details

Orient Overseas (International) Ltd. (“OOIL”) today announced a profit attributable to shareholders of US$272 million for the year ended 31st December 2008, compared to the profit of US$2,547 million recorded in 2007.  The reported profit for year 2007 included a gain of US$1.99 billion from the disposal of Terminals Division.

Net profit attributable to shareholders from continuing operations dropped 50% from US$552 million in 2007 to US$272 million in 2008.

The Directors are recommending the payment of a final dividend of US4.5 cents (HK$0.35) per share.

*    Net of Minority Interest

“China’s accession to the WTO in late 2001 saw a six-year upswing in the fortunes of container shipping as American and European consumption growth was met by Asian based production. With the deepening global economic downturn and increasing capacity in the industry, those buoyant conditions ended during the later part of 2008.  We have now entered what I expect will be a protracted downturn for the container shipping industry,” said Chairman, Mr. C C Tung, in announcing OOIL’s 2008 financial results. 

“Despite the increased costs and falling freight rates in 2008, Orient Overseas (International) Limited and its subsidiaries (the “Group”) recorded a profit attributable to shareholders for the year of 2008 of US$272.3 million.  As the prior year’s result of US$2,547.0 million included a one-time profit of US$1,994.7 million from the sale of the Terminal Division, the appropriate comparison is of profit from continuing operations.  The 2008 Profit from Continuing Operations is US$275.5 million, which is a US$278.2 million (50%) reduction from the equivalent US$553.7 million reported for 2007.”

“Going into last year our Container Transport and Logistics business faced a challenging environment with increasing costs and weakening demand as global economic conditions deteriorated.  The scheduled delivery of substantial new capacity into the industry also contributed to negative pressure on freight rates.” 

“The sub-prime issues that emerged in 2007 developed into a turmoil far exceeding most predictions and the financial landscape today looks vastly different from that of a year ago.  The impact of the financial crisis on the global economy has seen trade growth slow dramatically.  This was most noticeable in the last quarter of 2008 which, while still profitable for us, saw sudden and severe reductions in demand across a number of trades,” said Mr. Tung. 

“With a contraction in consumption in the United States, Europe and Japan all occurring at the same time, Asian economies have also been impacted more noticeably in 2009 given the importance of exports for China and the wider Asia-Pacific region.  The acute deterioration in the global economy has come at a time when the industry faces an unprecedented supply of new capacity, particularly in the form of very large vessels.  This combination of low demand growth and excessive new supply will almost certainly present the worst set of market dynamics that the container shipping industry has ever had to deal with.” 

“We are managing the business in 2009 with the expectation of a continued deterioration in the shipping markets over the course of the year.  The particularly severe drop in freight rates in the fourth quarter of 2008, compounded by further rate reductions and volume declines in the first quarter of 2009, has made the continuation of services at historic levels unsustainable,” said Mr. Tung. 

“Should the various stimulus packages that have been introduced by governments around the world be as successful as is hoped, then we could see a recovery in demand by the end of this year.  However, if there is only a gradual improvement in the global economy during 2010, then it is likely that conditions in the container shipping industry will take longer to improve given the worsening supply and demand balance over the next three to four years if there is no material change to the current schedule of new vessel deliveries.” 

“As Governments develop and implement stimulus packages, I encourage them to resist the introduction of protectionist policies as being adverse to global trade and to the prospects of a rapid global economic recovery,” said Mr. Tung. 

“It is fortunate that we have flexibility in managing our capacity through the mix of owned and chartered vessels making up our fleet.  By redelivering chartered-in vessels, we have the ability to more than offset the capacity increase from our newbuild ships delivering in 2009.  Through planned redeliveries and potential vessel lay-ups, we are positioned to further remove excess capacity to match market conditions.” 

“Our Property Development and Investment business (OODL) continued on plan through 2008.  We completed construction of the Hilton Double-Tree Hotel in Kunshan during the year and it opened in January 2009.  With the division focused on moving its existing projects toward completion, no new sites were acquired during the year,” continued Mr. Tung. 

“While we expect a lower economic growth rate for China in 2009, we have confidence in the Chinese economy over the medium to long term.  We remain of the view that the economies of the coastal regions in particular will continue to show the strongest growth, underpinning good real estate development and investment opportunities.” 

“With the favourable location, cost structure and market outlook for each of OODL’s projects, we continue to be confident in the success of the individual developments and of realising the full potential value of the division’s ongoing activities.” 

“Through an ongoing commitment to consistency in development of our people, to investment in IT and to process enhancement to control costs, improve productivity and deliver superior customer service, I have every confidence that the Group will continue to prosper over the longer term,” concluded Mr. Tung. 

Mr. Kenneth Cambie, the Group Chief Financial Officer, said that the Group’s net debt to equity ratio as at 31st December 2008 was 0.07 : 1, compared with a net cash position as at the end of 2007, mainly a result of the stage payments on newbuildings and continued investments in China projects.  “This ratio has been closely monitored in the light of the delivery and financing of new vessels ordered and forecasts for the business over the next four years.  It is the Group's objective to keep this key ratio below a threshold of 1.0,” he commented. 

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, logistics, property interests in the People’s Republic of China and New York, and portfolio investment securities.  With more than 280 offices in 55 countries the Group is one of Hong Kong’s most international of businesses.  OOIL is listed on The Stock Exchange of Hong Kong Limited.
 

C.C. Tung, Chairman, Orient Overseas (International) Limited

For further information contact

Kenneth Cambie, Chief Financial Officer Tel: (852) 2833 3518 Email: ken.cambie@ooilgroup.com

Stanley Shen, Investor Relations Tel: (852) 2833 3167 Email: stanley.shen@oocl.com

Website address:  http://www.ooilgroup.com/