June 24, 2003

Costs of Kvaerner Philly box ship mount
Aker Kvaerner says that a thorough review carried out in connection with the commissioning of Kvaerner Philadelphia's first containership has revealed higher costs and lower productivity than previously expected.

Delivery of the ship has been delayed for about one month, and the costs are estimated to be around NOK 200 million (about US $28.2 million) higher than previously reported. At the same time the yard has increased its cost estimate for the other two containerships under construction by an equivalent amount. Increased costs on the three ships implies that Kvaerner Philadelphia's operating results in the second quarter of 2003 will be weakened by an amount just above NOK 400 million ($56.4 million).

Aker Kvaerner acknowledges that the substantial commitment made to turn Kvaerner Philadelphia into an efficient and commercial yard has not so far given the desired results. In an effort to accelerate the improvement, Kvaerner Philadelphia will now further strengthen its capability in project management, procurement and construction management, and a more active follow-up initiated.

In parallel, Aker Kvaerner's shipyard in Finland, Kvaerner Masa-Yards, is implementing a very successful improvement program. The Finnish yard is well set to deliver a significantly better operating result than expected. This will to some extent offset the weaker results from Kvaerner Philadelphia. Aker Kvaerner expects that its shipyards as a whole will return a marginal loss for the year.

The first two containerships from Kvaerner Philadelphia have been bought by Matson Navigation Company, Inc. In agreement with the customer, the first vessel will be delivered in the beginning of August, approximately one month later than originally agreed. The second will be completed in the second quarter of 2004

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