The multinational construction company's announcement comes after Chiyoda Corp. (CHYCF) , McDermott's joint-venture partner on the Cameron LNG project, announced third-quarter 2018 results Tuesday sent McCormick stock south because of it's 50-50 joint venture with the company.
McDermott said unfavorable labor productivity and increases in subcontract, commissioning and construction management costs were responsible for the charge and that it's expected to impact the company's fourth quarter and full-year 2018 statements, the company said in a press release Wednesday afternoon.
McDermott is a 50-50 joint venture partner with Chiyoda in executing the Hackberry, La. technologically advanced facility that would produce 14 million tons of liquefied natural gas per year.
Chiyoda said in its earnings announcement that third-quarter results have an additional cost increase for the Cameron LNG project and another project. "Negotiations with the clients requesting reimbursement for the additional cost [of the projects] are in progress," the company said.
For Chiyoda's fiscal year 2019 ending March 31, "losses are mainly due to an increase in incremental construction costs for Cameron LNG project and Tangguh LNG project, and a reversal of deferred tax assets."
McDermott said both companies are on the same page on the decision regarding the change in estimates. McDermott expects to report 2018 fourth-quarter results on Feb. 25.