FEBRUARY 12, 2016 — Japan's shipbuilder Mitsui Engineering & Shipbuilding Co., Ltd. (MES) is facing a $95 million loss on the four 306 ton bollard pull Ulstein SX157 design ocean going AHTS that subsidiary Niigata Shipbuilding & Repair is building for ALP Maritime Services, the Netherlands based company acquired by Teekay Offshore in 2014 (see earlier story).
In a "Notice of Losses in Consolidated and Non-consolidated Financial Results" released February 3, MES said:"A subsidiary has recognized losses of Yen 3.8 billion [about $33.1 million] on construction of four Offshore Support Vessels during the 2nd quarter due to repeated design changes and problems. Additional losses of Yen 7.2 billion [about $62.8 million] have been anticipated, including a provision for losses during the third quarter due to unforeseen increases in materials and man hours. These losses are recorded under cost of goods sold.
"The subsidiary has made significant revisions in the construction process during this 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."
"Based on the above losses, MES itself has recognized a Yen 0.9 billion [about $7.8 million] Loss on valuation of shares of subsidiaries and has posted a ¥6.3 billion [about $55 million] 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."