SINGAPORE: Singaporean conglomerate Keppel Corp reported a 38 per cent fall in its third-quarter profit as low oil prices resulted in a dearth of orders for its drilling rigs, offsetting a 4 per cent rise in revenues at its property division.
Keppel, in which Singapore state investor Temasek is the biggest shareholder, reported a net profit of S$225 million ($162 million) for the three months ended Sept. 30 versus S$363 million a year ago. Revenue fell nearly 40 per cent to S$1.46 billion.
“Despite the gradual recovery in oil price, demand in the offshore market is expected to remain tepid. Oversupply remains a key concern in the offshore market, worsened by the overhang of rigs still under construction,” Chief Executive Loh Chin Hua said in a results briefing.
The city-state’s offshore and marine industry has been pummelled as clients cut spending to weather the slide in oil prices, hurting Keppel and cross-town rival, Sembcorp Marine . Some smaller firms have disclosed debt troubles, with oilfield services firm Swiber Holdings placed under judicial management.
Net profit at Keppel’s offshore and marine (O&M) division, which builds offshore drilling rigs and support vessels, dropped 93 per cent to S$11 million. The segment’s revenue fell 63 per cent.
The company has been cutting costs in the O&M segment, which has reduced its direct workforce by nearly 8,000, or around 26 per cent, in the first nine months. Keppel said it was reviewing its yard capacity in light of a decline in workload.
The division recorded a net order book worth S$4.1 billion. Since the last quarter, Keppel has excluded orders from rig leaser Sete Brasil, which has filed for bankruptcy protection amid a wider corruption scandal.
