March 29, 2012
Mitsubishi Heavy Industries, Ltd.
Notice Regarding Booking of Extraordinary Loss
From Onshore Wind Turbine Business
Tokyo, March 29, 2012 - Mitsubishi Heavy Industries, Ltd. (MHI) has announced that at a meeting earlier today, the MHI board of directors approved an inventory write-down and related measures in connection with the company's onshore wind turbine business. As a result of this decision, MHI expects to book a one-time extraordinary loss for the current fiscal year (FY2011) ending March 2012.
Since the 2008 banking crisis, demand for wind turbines in the North American market has stagnated, and the commercialization of cheap oil-shale gas and other matters have had a further dampening effect, making it more difficult for MHI to win new contracts. In this market environment, the company has continued to promote the development of new and more competitive wind turbines, but in view of few signs of recovery in the North American wind turbine market, it was decided to take steps that include write-down of related inventory and to build a solid foundation for this business.
Nevertheless, MHI remains committed to meeting society's need for renewable energy and intends to speed up its development of large offshore wind turbines, which require a particularly high level of technological sophistication, and to expand its onshore wind turbine business in Japan, where demand is expected to grow as a result of the government's "feed-in tariff" policy to promote renewable energy, as well as in overseas markets.
As a result of this write-down of wind-turbine inventory and related measures, the company expects to book a one-time extraordinary loss of 20 billion yen for FY2011.
The effects of this decision on consolidated earnings for the fiscal year ending March 2012 are still being examined, but should it be determined that a downward revision is necessary, such a decision will be made public without delay.