Financial Insights That Matter
By Katya Golubkova and Yuka Obayashi
TOKYO (Reuters) -Japan’s Mitsubishi Corp took a 52.2 billion yen ($342.4 million) impairment charge on its domestic offshore wind projects in the nine-month period ended in December, it said on Thursday.
Mitsubishi leads consortia which won Japan’s first state-run wind auctions in 2021 to run three offshore wind farm projects. The farms have a projected capacity of 1.76 gigawatts and were expected to start operations in 2028-2030.
The trading house said on Monday it is reviewing how to proceed with the offshore wind projects given a “significantly changed” business environment, showing that the country is not immune to rising costs across offshore wind projects globally.
Russia’s war on Ukraine and a related spike in prices, changes in supply chains, rising interest rates and other factors forced Mitsubishi to start re-evaluating the projects, chief executive Katsuya Nakanishi told a briefing on Thursday.
“At this point in time, it is not possible to say anything about the delivery date, the start of construction,” he said. Chubu Electric Power, a Mitsubishi partner in all three farms, also posted an 18 billion yen charge on the projects.
“Even if there is an additional impairment loss in the revaluation… the impact on business performance is limited because we are taking the maximum amount of impairment this time,” Nakanishi said.
On Thursday, Mitsubishi reported a 19% increase in nine-month net profit to December to 827.4 billion yen owing to gains in its liquefied natural gas business and asset sales, it said.
Mitsubishi kept its forecast for the full fiscal year ending in March unchanged at 950 billion yen.
So far, Japan has held three offshore wind auctions, with winners including western companies RWE, Iberdrola and BP. Last week, the government relaxed some of the auction rules to address soaring costs.
Mitsui, which in partnership with others, won an offshore wind farm development right in 2023, also warned this week of challenges amid rising construction costs and exchange rate fluctuations but said it planned to continue the business.
($1 = 152.4600 yen)
(Reporting by katya golubkova, yuka obayashi and satoshi sugiyama; editing by jacqueline wong, muralikumar anantharaman and saad said)
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