Launch of a New Company in Shipbuilding Operations

February 20, 2003

Sumitomo Heavy Industries, Ltd. (SHI) officially announces the opening on April 1, 2003 of the new consolidated subsidiary, Sumitomo Heavy Industries Marine & Engineering Co., Ltd. The new company will be a wholly owned subsidiary of SHI. SHI's entire shipbuilding and repair businesses will be transferred to this new company, apart from sales and marketing operations, which will continue to be managed by SHI.

1. Objectives for establishing the new company:
In the shipbuilding industry, Korea and China are expected to continue expanding their supply capabilities, intensifying price competition in this area. By spinning off SHI's shipbuilding and repair businesses, the new company aims to improve its technology to satisfy high-need customers' requirements and to realize flexible, speedy management. The company will also seek to revitalize the operations by adopting a new personnel and wage system to fit its business model. Plans to boost engineering capabilities at the new company and develop ships' designs that will differentiate the company from the competition will also assist in strengthening its position in the industry.

2. Profile of the new company
(1) Name:
Sumitomo Heavy Industries Marine & Engineering Co., Ltd

(2) Description of business:
R & D, sales, design, manufacturing, conversion, demolition and repairing of ships and offshore structures, plus marine engineering operations

(3) Establishment (scheduled):
April 1, 2003

4) Location:
Head office: Kita-Shinagawa 5-9-11, Shinagawa-ku, Tokyo, Japan
Shipyard: Yokosuka Shipyard

(5) President
Shinji Nishimura

(6) Capital
2,000,000,000 yen

(7) Turnover
Approx. 30,000,000,000 yen (forecast for fiscal 2003)

(8) Financial closing
March end

(9) Number of employees
Approx. 380

(10) Shareholder
Sumitomo Heavy Industries, Ltd. (100%)