On the Shipbuilding Market EESC Hearing/Turku Eero Mäkinen 16.11.2006 Turku, Finland

World Europe Finland Finland Preferred for Innovation 29-Nov-18

Asian Industry on a Roll Source : Clarkson Preferred for Innovation 29-Nov-18

Source : Cesa Preferred for Innovation 29-Nov-18

Merchant fleet growing faster The world fleet is growing three times as fast as the 1990-2000 average Source : Clarkson Preferred for Innovation 29-Nov-18

2006 forecast on current trends Orders for New Ships 2006 forecast on current trends Source : Clarkson Preferred for Innovation 29-Nov-18

Quarterly Evolution of World Orderbook by Shipbuilding Area since 1999 50 000 100 000 150 000 200 000 250 000 1Q 1999 2Q 1999 3Q 1999 4Q 1999 1Q 2000 2Q 2000 3Q 2000 4Q 2000 1Q 2001 2Q 2001 3Q 2001 4Q 2001 1Q 2002 2Q 2002 3Q 2002 4Q 2002 1Q 2003 2Q 2003 3Q 2003 4Q 2003 1Q 2004 2Q 2004 3Q 2004 4Q 2004 1Q 2005 2Q 2005 3Q 2005 4Q 2005 1Q 2006 2Q 2006 3Q 2006 Rest of the World East. Europe West. Europe China Japan S. Korea (m. gt) 4,6% 4,1% 5,9% 21,3% 27,7% 36,4% Source: BRS Preferred for Innovation 29-Nov-18

Development in the last decade Source : Clarkson Preferred for Innovation 29-Nov-18

Record Investment Across all vessel types there was a record estimated investment of $104.9 billion in 2005 (first time shipbuilding investment has hit $100 billion!). Already $100.9 billion invested in first nine months of 2006 including $35.1 billion of tankers. This is 28% ahead of 2005 levels and is putting us on course for yet another year of record investment. Source : Clarkson Preferred for Innovation 29-Nov-18

World orderbook Source : Cesa Preferred for Innovation 29-Nov-18

Newbuilding Requirement Forecast vs Capacity Evaluation (SAJ) Preferred for Innovation Source :Jecku 2006, Japanese delegation 29-Nov-18

Cost Pressures on Shipyards Preferred for Innovation 29-Nov-18

Preferred for Innovation

Medium Term Forecast Deliveries “repeat” the contracting cycle: Strongly increasing trend. Peak in 2007 and 08. Decline in 2009 Sharp decline in 2010 Low-point in 2011 Declines: No. of ships: 25-37% CGT: 30-40% Historical CGT-declines: 1976-80: 40% 1984-88: 50% Source : Clarkson Preferred for Innovation 29-Nov-18

Some conclusions Despite increasing shipyard capacity worldwide activity in the newbuilding market remains extremely strong. Demand across all ship types remains robust and shipyard berths for 2009 delivery are now scarce. This continuing strong demand, coupled with tight yard capacity, has led to new increases in shipbuilding prices during 2006 which are now back at, or in excess, of record highs. Underlying shipyard costs (steel prices, labour costs, exchange rates) are also high, contributing to high ship prices. In the short term the market looks strong and we expect prices to stay high for the next few months. However, potential over-capacity is still an issue and yards will have to market 2010 berths carefully if they are to maintain these price levels. Source : Clarkson Preferred for Innovation 29-Nov-18

Europe

Development of Shipbuilding long term market shares World Shipbuilding output by countries (%GT) Europes’ share relatively larger when comparing compensated gross tonnage (cgt) 2001: South Korea 30%, Japan 32%, Europe 25.2%, China 6.8%, Others 6% 2001: CGT 100 100 80 80 60 60 market share % 40 40 20 20 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 UNITED KINGDOM OTHER WESTERN EUROPE year USA JAPAN SOUTH KOREA PEOPLES REP. OF CHINA OTHERS Source: Lloyd's Register, MTT 15.2.2001 /HSZ 12.5.2002 Preferred for Innovation 29-Nov-18

Overview Preferred for Innovation 29-Nov-18

2005 performance Preferred for Innovation 29-Nov-18

Orderbook Source : Cesa Preferred for Innovation 29-Nov-18

Deliveries Preferred for Innovation 29-Nov-18

New orders Preferred for Innovation 29-Nov-18

Overview Preferred for Innovation 29-Nov-18

Maintenance, Repair and Conversion Turnover 2005 Source : Cesa Preferred for Innovation 29-Nov-18

Finland

Product history from the 2nd World War (60 years) In the beginning domestic customers; shipowners and government From the fifties icebreakers, domestic and later export 50 – 90 deliveries to the Soviet Union From the sixties: ferries, domestic, later (North) Europe From the seventies: cruise vessels, global market Other specialized vessels, occasionally Today, only one major shipbuilding company: Cruise ships, global market; strong position Ferries, European market, strong position Arctic products/technology, smallish units Domestic market, small units, mostly government Preferred for Innovation 29-Nov-18

Deliveries of Finnish shipyards Lähde: Meriteollisuusyhdistys ry / Association of Finnish Marine Industriesm:\tilauskanta\rseti01af.ppt 4.1.2006 RSe Preferred for Innovation 29-Nov-18

Manhour Cost €/h 30 27,8 26,8 25,5 24,7 25 23,7 19,6 20 16,7 15 €/h 10 7,8 5,9 5 2,4 ITALY SPAIN GERMANY DENMARK FRANCE FINLAND CROATIA POLAND ROMANIA NETHERLANDS Source: University of Bremen - iaw Preferred for Innovation 29-Nov-18

compensated gross tonnage Cruise vessels (fleet growth 6%) Deliveries CRUISE VESSELS 200 000 400 000 600 000 800 000 1 000 000 1 200 000 1 400 000 1 600 000 1995 2000 2005 2010 2015 compensated gross tonnage 0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0 9,0 10,0 %-share cgt share Preferred for Innovation 29-Nov-18

Cruise Vessels, Annual Deliveries (in number of ships) Preferred for Innovation 29-Nov-18

Cruise Vessels, Annual Deliveries (by GT) 403986 627926 507131 633392 178400 247600 381100 354300 300951 108865 300985 294595 407489 193292 309679 428239 334700 76152 181830 182340 90090 92400 185400 160900 185700 231750 78309 80439 52649 43188 41500 100 000 200 000 300 000 400 000 500 000 600 000 700 000 800 000 900 000 1 000 000 1 100 000 1 200 000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Gross Tonnage   Preferred for Innovation 29-Nov-18

Ro-pax vessels with Loa > 100 m compensated gross tonnage ROPAX/Ferries (medium and large size only) Deliveries Ro-pax vessels with Loa > 100 m 1 000 000 10,0 900 000 9,0 800 000 8,0 700 000 7,0 compensated gross tonnage 600 000 6,0 share-% cgt 500 000 5,0 share 400 000 4,0 300 000 3,0 200 000 2,0 100 000 1,0 - 0,0 1995 2000 2005 2010 2015 year Preferred for Innovation 29-Nov-18

Thank you for your attention Preferred for Innovation 29-Nov-18