Mitsubishi Heavy Industries website

Mitsubishi Heavy Industries ups its boat business extraordinary losses forecast

Mitsubishi Heavy Industries announced that it will add 50.85 billion yen in extraordinary losses to its passenger boat business for the period of January to March, 2016.

There were extra costs involved in constructing two full-sized passenger cruise boats ordered by Aida Cruises in November 2011. Due to extra costs incurred due to difficulties in prototype construction, losses for the full year ending March 2014 were 64.126 billion yen and 69.534 billion yen for the full year ending March 2015

Furthermore, due to a design change at the final stages of the first boat’s construction, as well as measures to handle a defect that had been discovered, the delivery time was extended and extraordinary losses for the period of April to December 2016 were adjusted to 530.610 billion yen.

For the period of January to March 2016, the final stages of construction and the establishment of a control system took more time than expected. There was also a propulsion machinery defect and measures required to handle excessive noise pointed out by customer at a trial run at sea, as well as a fire, all of which resulted in a delivery time delay to the middle of March. For the second boat, factors such as the extending of construction time and additional tweaking led to changes in the construction process. As a result, it is expected that extraordinary losses will be adjusted to 5.085 billion yen. The total of extraordinary losses for the year is 103.911 billion yen.

The estimate for the entire financial year’s earnings has been adjusted to 66 billion yen, which is 24 billion yen less than expected.

On the other hand, due to trends in financial results for the fiscal year ending March 2016 in affiliated company Mitsubishi, which is currently mired in a controversy over inaccurate fuel economy data, there may be changes to Mitsubishi Heavy Industries’ forecast.

(Translated by Greg Scott)