Deteriorating project profitability due to fluctuations in materials and equipment prices and labor costs, natural disasters and disease
First written in FY2018. 3 of 9 entries say "Materialised", first in FY2024-Q3. Latest entry: FY2026.
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- FY2026MaterialisedAnnual report
「Due to the impact of armed conflict involving the United States, Israel, Iran and others in the Middle East, projects being executed by the Group have been affected by temporary evacuations to ensure safety and restrictions on the movement of construction personnel and the transportation of supplies. As a result, delivery delays and additional costs are expected to arise.」
Temporary evacuations, restrictions on movement and transportation, delivery delays and additional costs related to armed conflict actually occurred in projects under execution. - FY2024MaterialisedAnnual report
「In light of the progress of major overseas projects, we conducted a focused review of future execution plans and operating budgets. Taking into account the business environment affecting profitability in the current consolidated fiscal year, including staffing levels for recent design work and delivery delays caused by tight supply and demand for equipment and materials in the Middle East, we decided to make additional provisions for risk response costs deemed necessary.」
Staffing levels for design work and tight supply and demand for equipment and materials in the Middle East, along with delivery delays, became factors contributing to deteriorating profitability, leading to the recognition of additional risk response costs. - FY2024-Q3MaterialisedAnnual report
「Profit declined because the Group made provisions for costs to address the risk of schedule delays on some projects currently under execution in Japan and overseas.」
Costs to address the risk of delays to project schedules were anticipated and appeared in actual results as a decline in profit. - FY2022WorsenedAnnual report
「We will continue to closely monitor developments regarding the impact of surging prices for equipment and materials and transportation costs against the backdrop of the situation in Ukraine and other factors.」
Surging equipment and materials prices and transportation costs, against the backdrop of the situation in Ukraine and other factors, were explicitly identified as part of the current business environment. - FY2021-Q3RestatedAnnual report
「The additional costs expected at present have been calculated, and the impact is being estimated for each project after taking into account the contractual terms with customers and other factors. Basically, however, this is based on the assumption that current conditions will not deteriorate significantly and that the business environment for the Group will gradually recover from the fourth quarter of the consolidated fiscal year onward.」
The process of estimating additional COVID-19 costs on a project-by-project basis and recognizing them for accounting purposes is continuing. Although a recovery in the business environment from the fourth quarter onward is assumed, the uncertainty of this assumption is considered high. - FY2021-Q2RestatedAnnual report
「The additional costs expected at present have been calculated, and the impact has been estimated for each project after taking into account the contractual terms with customers and other factors. After reflecting these amounts in the total contract amount and total construction costs, revenue from completed construction contracts and the cost of completed construction contracts have been recognized for the cumulative second quarter of the current consolidated fiscal year.」
The process of estimating additional COVID-19 costs on a project-by-project basis and reflecting them in the total contract amount and total construction costs is continuing. - FY2021-Q1Estimation and cost recognition of additional COVID-19 costsAnnual report
「Accordingly, for major projects affected by the spread of COVID-19, the Company calculated the additional costs currently expected, estimated the impact amount for each project after considering contractual terms with customers and other factors, reflected it in total contract revenue and total construction costs, and recognized completed construction revenue and completed construction costs for the cumulative first quarter of the current consolidated fiscal year.」
The impact of COVID-19-related delivery delays and additional costs is estimated for each project and reflected in the total contract amount and total construction costs. - FY2020WorsenedAnnual report
「For major projects affected by the spread of COVID-19, the expected additional costs as of the current date were calculated, the impact was estimated for each project taking into account the contractual terms with customers and other factors, and the amounts were reflected in total construction costs.」
It is stated that, regarding the risk of deteriorating profitability due to disease, natural disasters and other factors, additional costs related to COVID-19 were reflected in the total construction costs of individual projects. - FY2018First statedAnnual report
「If project execution problems beyond expectations, such as sharp fluctuations in materials and equipment prices and labor costs or the occurrence of natural disasters and disease, or serious accidents involving plants attributable to the company occur, project profitability may deteriorate and affect JGC Group's business results.」
The disclosure identifies the risk of deteriorating profitability in primarily lump-sum projects due to prices and labor costs, natural disasters and disease, and serious accidents.