Mitsui Engineering says ocean-going tug contract is loss-makingYard News // February 15, 2016
Mitsui Engineering & Shipbuilding Co Ltd (MES) has confirmed that has recognised losses in consolidated and non-consolidated financial results for the third quarter ending 31 December 2015.
The company says a subsidiary recognized losses of ¥3.8 billion on construction of four offshore support vessels during the second quarter due to repeated design changes and problems.
The vessels in question are believed to be the quartet of DP2 anchor handling tug/salvage vessels it is building for ALP Maritime.
Additional losses of ¥7.2 billion have been anticipated, including a provision for losses during the third quarter due to unforeseen increases in materials and man hours.
"The subsidiary has made significant revisions in the construction process during the third quarter. MES has increased dispatch of technical engineers and skilled technicians to support as a parent company to complete the construction of this project," said MES.
Based on the above losses, MES has recognized a ¥0.9 billion loss on valuation of shares of subsidiaries and has posted a ¥6.3 billion provision for loss on business of subsidiaries, as extraordinary losses. This will not affect the consolidated financial results as these accounts are set-off in the consolidated adjustment.