Increase in Construction Costs for Ethylene Production Equipment for the US Market
First written in FY2017-Q2. 5 of 7 entries say "Worsened", first in FY2017-Q3. Latest entry: FY2021.
Toyo Engineering moved to the "Worse" side of this theme in 2016, 3 years before the typical company in this theme (2019).
3 other companies' latest entry also says "Mitigated".
- FY2021MitigatedAnnual report
「The U.S. ethylene production facility project, which had been the largest concern in recent years, ended in fiscal 2019, eliminating unprofitable projects.」
The U.S. ethylene production facility project ended, and the Company stated that it had eliminated unprofitable projects. Although the risk of higher construction costs had materialized in the past, the ongoing exposure related to the project had contracted. - FY2019WorsenedAnnual report
「The total loss on the project is expected to be approximately ¥80 billion, compared with a contract value of approximately ¥150 billion.」
The Company stated that the total loss on the U.S. ethylene production facility project was expected to be approximately ¥80 billion against a contract value of approximately ¥150 billion. In addition, during preparations for commissioning, rework resulting from equipment defects and construction quality issues, as well as schedule revisions requested by the customer, increased construction and management costs. - FY2018WorsenedAnnual report
「As a result, the Company had no choice but to anticipate substantial increases in construction costs and Company personnel expenses related to these measures. Regrettably, the operating loss deteriorated by approximately ¥15 billion from the forecast announced with the third-quarter results, which was an operating loss of ¥18 billion.」
At the U.S. ethylene production facility project, increases in construction costs and personnel expenses related to the measures caused the operating loss to deteriorate by approximately ¥15 billion from the forecast as of the third quarter. - FY2018-Q3WorsenedAnnual report
「Operating income (loss) was an operating loss of ¥23 billion, compared with an operating loss of ¥1.5 billion in the same quarter of the previous year. This reflected lower gross profit due to a decline in revenue, higher selling, general and administrative expenses due to more active proposal activities, and an expected ¥26.6 billion deterioration in the profitability of the U.S. ethylene production facility project from the outlook at the time of the second-quarter results.」
The expected profitability of the U.S. ethylene production facility project deteriorated by ¥26.6 billion from the outlook at the time of the second-quarter results, increasing the operating loss to ¥23 billion. Existing risks of higher construction costs have become more serious. - FY2017WorsenedAnnual report
「After reviewing the construction schedule and quantities and rigorously reassessing future costs, the Company recognized substantial increases in costs for additional pile-construction work, higher construction quantities and measures to prevent delays to the construction period.」
The substantial increases in costs related to pile construction, construction quantities and prevention of construction delays at the ethylene production facility in the United States were reflected in full-year results, resulting in an operating loss of ¥2 billion. - FY2017-Q3WorsenedAnnual report
「The project had required substantial rework on pile construction because of ground conditions since spring last year, and work to address the issue had been progressing. In January this year, the pile-construction problems had become largely foreseeable, and the design for the project as a whole had been finalized. Based on these developments, the construction schedule and quantities were reviewed, and future costs were rigorously reassessed. As a result, the Company recognized substantial increases in costs for additional pile-construction work, higher construction quantities, and measures to prevent delays to the construction period and strengthen the construction-management structure.」
At the ethylene production facility in the United States, substantial increases in costs related to ground and pile-construction problems, higher construction quantities, prevention of construction delays and strengthening of the management structure were newly recognized, resulting in an operating loss. Existing risks of higher construction costs have become more serious. - FY2017-Q2MaterialisedAnnual report
「Although construction costs increased for the ethylene production facility for the United States, operating income reached ¥5.3 billion, up 20.4% year on year, due to the effect of higher revenue and reductions in selling, general and administrative expenses.」
Construction costs actually increased at the ethylene production facility in the United States. The provision for construction losses also increased by ¥2.3 billion from the end of the previous consolidated fiscal year.