MHI newbuild cruise ship loss

MHI decided to book an extraordinary loss of approximately 60 billion yen, because of difficulties encountered in the construction of two cruise vessels for AIDA Cruises, part of the COSTA Group.

The shipbuilder initially set up a project to facilitate prompt implementation of measures necessary for the newly ordered ships’ construction ordered in November 2011.

Because of this MHI didn’t expect to encounter any major problems during the build because it allotted a proportionate amount of time to handling the pre-construction details.

But as construction of the prototype got underway, MHI said difficulties became evident, especially in relation to the volume of design work which became “vast and significant” with huge design changes having to be made to the cabins and other areas, causing delays to the build.

MHI said that the delay has also meant increased design costs but also negative factors in terms of additional material procurement and construction.

The company said this loss doesn’t change the company’s earnings forecasts for FY2013 at the moment.