Cost Overruns and Deterioration in Earnings on Large Individual Contract Projects
First written in FY2016. 6 of 19 entries say "Materialised", first in FY2017-Q2. Latest entry: FY2026-H1.
Kawasaki Heavy Industries moved to the "Worse" side of this theme in 2016, 5 years before the typical company in this theme (2021).
The whole theme swung hardest in 2019: 3 of 6 companies on the "Worse" side.
0 other companies' latest entry also says "Restated".
- FY2026-H1RestatedAnnual report
「For some overseas LNG tank construction projects, we filed for arbitration with the ICC (The International Chamber of Commerce) regarding losses incurred by us as a result of breaches of contract and other factors involving overseas subcontractors. In the arbitration proceedings, the counterparty has also filed a damages claim against us, but we believe that the claim is unjustified and lacks a legitimate basis. We will continue to assert the validity of our position through the arbitration proceedings.」
The ICC arbitration concerning overseas LNG tank construction projects, the counterparty's damages claim, and the company's position continue to be reported. - FY2025-H1RestatedAnnual report
「For some overseas LNG tank construction projects, we filed for arbitration with the ICC (The International Chamber of Commerce) regarding losses incurred by us as a result of breaches of contract and other factors involving overseas subcontractors. In the arbitration proceedings, the counterparty has also filed a damages claim against us, but we believe that the claim is unjustified and lacks a legitimate basis. We will continue to assert the validity of our position through the arbitration proceedings.」
The ICC arbitration concerning overseas LNG tank construction projects, the counterparty's damages claim, and the company's position continue to be reported. - FY2024-Q1RestatedAnnual report
「For some overseas LNG tank construction projects, we filed for arbitration with the ICC (The International Chamber of Commerce) regarding losses incurred by us as a result of breaches of contract and other factors involving overseas subcontractors. In the arbitration proceedings, the counterparty has also filed a damages claim against us, but we believe that the claim is unjustified and lacks a legitimate basis. We will continue to assert the validity of our position through the arbitration proceedings.」
The ICC arbitration concerning overseas LNG tank construction projects, the counterparty's damages claim, and the company's position continue to be reported. - FY2023MitigatedAnnual report
「In addition, for projects after orders have been received, we have timely reported to the Management Committee and the Board of Directors any signs in the market environment or project progress that could have a significant impact on operating performance and other results, while also working to strengthen monitoring functions.」
To address risks associated with large projects, we continue to operate a system that reports post-order warning signs to the Management Committee and the Board of Directors, in addition to pre-order reviews and control of aggregate loss risk. - FY2023-Q2RestatedAnnual report
「For some overseas LNG tank construction projects, we filed for arbitration with the ICC (The International Chamber of Commerce) regarding losses incurred by us as a result of breaches of contract and other factors involving overseas subcontractors. In the arbitration proceedings, the counterparty has also filed a damages claim against us, but we believe that the claim is unjustified and lacks a legitimate basis. We will continue to assert the validity of our position through the arbitration proceedings.」
The ICC arbitration concerning overseas LNG tank construction projects, the counterparty's damages claim, and the company's position continue to be reported. - FY2022MitigatedAnnual report
「We introduced the "Monthly Management Overview Report," incorporating the functions of the former Project Risk Management Committee, and established and embedded a system under which matters are reported monthly to the Management Committee and the Board of Directors. The reports cover not only the progress of individual projects under execution, but also orders received, market conditions, and other matters that could have a significant impact on the management plan or operating performance.」
To address loss risks on large projects, we established a system for reporting orders received, market conditions, and execution status monthly to the Management Committee and the Board of Directors, in addition to pre-order reviews and control of aggregate loss risk. - FY2022-Q1RestatedAnnual report
「In the arbitration proceedings, the counterparty has also filed a damages claim against us. We believe that the claim is unjustified and lacks a legitimate basis. We will continue to assert the validity of our position through the arbitration proceedings.」
The counterparty's damages claim and the company's position in the ICC arbitration concerning overseas LNG tank construction projects continue to be reported. - FY2020-Q2Disclosure of the counterparty's damages claimAnnual report
「In the arbitration proceedings, the counterparty has also filed a damages claim against us. We believe that the claim is unjustified and lacks a legitimate basis. We will continue to assert the validity of our position through the arbitration proceedings.」
The disclosure newly states that, in the ICC arbitration proceedings concerning overseas LNG tank construction projects, the counterparty has also filed a damages claim against us. The company states that it believes the claim lacks a legitimate basis and will continue to assert its position in the arbitration proceedings. - FY2020-Q1MaterialisedAnnual report
「Operating income declined by ¥2.6 billion year on year, due to lower sales and cost fluctuations on certain projects, resulting in an operating loss of ¥3.5 billion.」
Cost fluctuations on certain projects in the Vehicle segment emerged as an actual factor behind the deterioration in operating loss. - FY2019WorsenedAnnual report
「For some overseas LNG tank construction projects, during the fiscal year under review we filed for arbitration with the ICC (The International Chamber of Commerce) regarding losses incurred by us as a result of breaches of contract and other factors involving overseas subcontractors. We plan to recover the approximately ¥51 billion in damages through arbitration, and have recorded part of this amount under "Other" in investments and other assets.」
The damages claim related to overseas LNG tank construction projects amounted to approximately ¥51 billion, and the matter progressed to arbitration with the ICC. The amount was updated from the approximately ¥46 billion previously disclosed, and recovery procedures remain under way. - FY2019-Q3Update to damages claimAnnual report
「For some overseas LNG tank construction projects, total costs increased above the initial estimates due to breaches of contract and other factors involving overseas subcontractors. Accordingly, by the end of December 2018 we had filed a claim for approximately ¥46 billion in damages for part of the losses we incurred as a result of the subcontractor's breach of contract, and are pursuing procedures to recover the claimed amount.」
The increase in total costs due to the subcontractor's breach of contract on overseas LNG tank construction projects and the related damages claim continue to be reported. The claim amount was updated from the approximately ¥48 billion previously reported to approximately ¥46 billion. - FY2019-Q2WorsenedAnnual report
「Accordingly, by the end of September 2018 we had filed a claim for approximately ¥48 billion in damages for part of the losses we incurred as a result of the subcontractor's breach of contract, and are pursuing procedures to recover the claimed amount.」
The increase in total costs due to the subcontractor's breach of contract on overseas LNG tank construction projects continued, and the damages claim increased from the approximately ¥40 billion previously reported to approximately ¥48 billion. Procedures to recover the claimed amount are under way. - FY2019-Q1MaterialisedAnnual report
「For some overseas LNG tank construction projects, total costs increased above the initial estimates due to breaches of contract and other factors involving overseas subcontractors. Accordingly, in July 2018 we filed a claim for approximately ¥40 billion in damages for part of the losses we incurred as a result of the subcontractor's breach of contract. A portion of the claimed amount has been deducted from the estimate of total costs and recorded under "Other" in current assets.」
Total costs increased on overseas LNG tank construction projects due to a subcontractor's breach of contract, and a claim for approximately ¥40 billion in damages was filed in July 2018. - FY2018-Q3MaterialisedAnnual report
「This vessel was the first vessel type for which we had received an order, and defects at the design stage and increases in material costs and other expenses had occurred.」
Design defects and increases in material costs and other expenses actually arose on an offshore work vessel, ultimately resulting in the cancellation of the shipbuilding contract and the recognition of losses totaling ¥12.833 billion, including impairment losses on inventories and losses on accounts receivable. - FY2018-Q2MitigatedAnnual report
「Operating income and loss improved by ¥11.2 billion from the same period of the previous year, when an additional allowance for doubtful accounts and increased provisions for losses on construction contracts were recorded, resulting in an operating loss of ¥5.1 billion.」
The operating loss improved by ¥11.2 billion as the effects of the additional allowance for doubtful accounts and increased provisions for losses on construction contracts recognized in the same period of the previous year subsided, but a loss of ¥5.1 billion remained. - FY2018-Q1MaterialisedAnnual report
「Operating income and loss deteriorated by ¥3.4 billion from the same period of the previous year to an operating loss of ¥2.8 billion, due to lower revenue, higher construction costs, and the impact of a reversal of the allowance for doubtful accounts recognized in the same period of the previous year.」
Higher construction costs actually arose in the Shipbuilding and Ocean Engineering segment and were reflected in the larger operating loss. - FY2017-Q3MaterialisedAnnual report
「Operating income deteriorated by ¥11.2 billion year on year to an operating loss of ¥13.8 billion, owing mainly to an additional allowance for doubtful accounts on trade receivables from a local Brazilian joint venture and an increase in provisions for losses on construction contracts due to the stronger yen and higher costs.」
The increase in provisions for losses on construction contracts due to the stronger yen and higher costs continued, and the operating loss in the Shipbuilding and Ocean Engineering segment increased in the actual results. - FY2017-Q2MaterialisedAnnual report
「Operating income and loss deteriorated by ¥13.3 billion from the same period of the previous year to an operating loss of ¥16.4 billion, mainly due to an additional allowance for doubtful accounts receivable from a local Brazilian joint venture and increased provisions for losses on construction contracts due to the stronger yen and higher costs.」
The increase in provisions for losses on construction contracts due to the stronger yen and higher costs materialized, resulting in a larger operating loss in the Shipbuilding and Ocean Engineering segment. - FY2016First statedAnnual report
「If material and labor costs rise due to changes in political and economic conditions that could not initially have been anticipated, or if costs increase beyond the initial estimates because of design changes, disruptions to the construction process or other factors, resulting in deterioration in the profitability of the project, this may affect the performance of our Group.」
Although the head office conducts risk analysis and considers countermeasures before contracts are signed, unexpected cost increases are identified as a risk.