Mitsubishi charges $342 Million for Japan Offshore Wind Projects
Mitsubishi Corp., a Japanese company, announced on Thursday that it had taken an impairment charge of 52.2 billion yen (US$342.4 million) on its domestic offshore projects for the nine months ended in December.
Mitsubishi led consortiums that won Japan's state-run auctions for wind farms in 2021. The projects include three offshore wind farms. The farms had a capacity of 1,76 gigawatts, and they were scheduled to begin operations between 2028-2030.
The trading house announced on Monday that it will review how to proceed with offshore wind projects in light of a "significantly altered" business environment. This shows that the country's offshore wind project costs are not immune from rising.
Katsuya Nakanishi, the chief executive of Mitsubishi, said that the war in Ukraine by Russia and the resulting spike in prices and changes to supply chains, as well as rising interest rates, forced Mitsubishi's re-evaluation of projects.
He said that at this time it was not possible to give any information about the delivery date or the start of the construction. Chubu Electric Power - a Mitsubishi partner involved in the three farms - also charged 18 billion yen for these projects.
Nakanishi stated that "even if an additional impairment loss is recorded in the revaluation...the impact on the business performance will be limited, because we have taken the maximum amount this time."
Mitsubishi announced a 19% rise in net profit for the nine months to December, to 827.4 trillion yen, due to gains from its liquefied gas business and asset sale, it said.
Mitsubishi's forecast for the fiscal year ending March is unchanged at 950 billion Japanese yen.
Japan has so far held three auctions for offshore wind, and the winners include western companies RWE Iberdrola, BP. Last week, Japan's government relaxed certain auction rules in order to reduce costs.
Mitsui warned of the challenges it would face due to rising construction costs and fluctuating exchange rates but stated that they planned to continue their business. $1 = 152.4600 Japanese yen (Reporting and editing by Jacqueline Wong; Muralikumar Aantharaman, and Saad Sugiyama)
(source: Reuters)
