MHI to record loss of nearly $585 million from its cruise ship business
Mitsubishi Heavy Industries, Ltd. (MHI) intends to book an extraordinary loss from its cruise ship business in the company's consolidated financial results for fiscal year (FY) 2013 (ending March 31, 2014), the Company said Monday in a press release.
In November 2011 MHI received an order for two large-sized cruise ships for the AIDA Cruises brand*. Based on its previous experience building cruise ships, the company set up a project to facilitate prompt implementation of measures necessary for the newly ordered ships' construction. Also, the company, because it views the two ships as next-generation energy-efficient cruise vessels that will function as a prototype for the AIDA Cruises brand, accordingly allotted a proportionate amount of time to handling the pre-construction details.
The foregoing initiatives notwithstanding, as work proceeded in the actual construction phase of the project, difficulties involved in the construction of the prototype became evident. Moreover, the volume of design work relating to the cruise ships cabins and other areas has been vast and significant design changes have been made, with the combined result of a delay in the design work. Said delay has translated not only to increased design costs but also to negative factors in terms of additional material procurement, construction schedule, etc.; and these adverse influences have eroded the originally planned cost structure.
MHI has decided to book an extraordinary loss of approximately 60 billion yen, on the two vessels, as a loss provision related to the construction work in its consolidated financial results for FY2013.
MHI doesn't change the company's earnings forecasts for FY2013 announced on February 6, at this moment. Should it be determined that any revisions are necessary, the company will announce without delay.
AIDA Cruises belongs to the COSTA Group, a European subsidiary of Carnival Corporation & plc. The two cruise ships originally ordered feature 124,500 gross tonnage and capacity to carry approximately 3,300 passengers. Construction of the first of the two vessels got under way in June 2013.
Tokyo, Japan headquartered Mitsubishi Heavy Industries, Ltd., part of the Mitsubishi Group, is a Japanese multinational engineering, electrical equipment and electronics company. The company specializes in manufacturing of aerospace components, air conditioners, aircraft, automotive components, forklift trucks, hydraulic equipment, machine tools, missiles, power generation equipment, ships, and space launch vehicles. Through its defense-related activities it is the world's 23rd-largest defense contractor measured by 2011 defense revenues, and the largest based in Japan.