Keppel O&M profit sinks amid prolonged downturn

Singapore’s offshore builder Keppel Offshore & Marine experienced a decline in both profit and revenues during the second quarter 2017 affected by lower volume of work amid prolonged downturn. 

Keppel Corporation on Thursday posted financial results for the second quarter of 2017 according to which revenues for the company’s Offshore & Marine division declined by 38%. Namely, the revenues for the second quarter 2017 totaled S$449 million compared to S$720 in the same period of 2016 due to of lower volume of work.

Further, the second quarter 2017 profit of S$1 million declined from S$61 million due mainly to lower operating results arising from lower revenue, lower share of associated companies’ profits and higher net interest expense.

At the end of the period, the Offshore & Marine Division’s net order book, excluding the Sete rigs, stood at S$3.4 billion.

Faced with the global sector downturn, the division has been rightsizing its operations for what is expected to be an extended slowdown. In order to streamline operations and capture new opportunities, Keppel Corporation recently reorganized Keppel O&M’s operations into New Builds, covering offshore as well as gas & specialized vessels, and Conversions & Repairs.

The company also divested Verolme shipyard in Rotterdam to the Damen Shipyards Group for approximately €24 million.

‘Quick recover unlikely’

Commenting on the Offshore & Marine division’s results on Thursday, Loh Chin Hua, Keppel Corporation CEO, said: “Despite some pick-up in activity in the offshore market, the general consensus is that, with the prevailing uncertainty in the oil market, and oversupply in the jack-up market, a quick recovery is unlikely. Our rightsizing will enable us to weather through a prolonged downturn.”

Regarding the company’s reorganization, Loh Chin Hua also said: “The reorganization saw the integration of key functions in the New Builds division, comprising Keppel FELS and Keppel Singmarine, which allows Keppel O&M to improve efficiency and more importantly, better leverage synergies and different capabilities within its group for new build solutions.”

Offshore Energy Today Staff