Keppel’s Q1 profit down 42% on oil slump

SINGAPORE — Keppel Corp reported yesterday a 41.5 per cent slump in net profit in the first quarter, bruised by its offshore and marine business as persistently low oil prices resulted in project deferments and delivery delays.

For the three months ended March 31, net profit fell to S$210.6 million from S$360.2 million in the corresponding period last year, as revenue slid 38.1 per cent to S$1.7 billion, Keppel, the world’s biggest offshore oil rig builder, said in an after-market statement filed with the Singapore Exchange.

“The sustained low oil price environment continues to take a toll on the global oil and gas industry, which is in the midst of one of the most severe downturns in recent times. In the global offshore industry we are seeing layoffs, mergers, as well as large reductions in capital expenditure as the industry prepares for a longer winter,” said Keppel Corp CEO Loh Chin Hua in the statement.

The offshore and marine division has secured S$200 million of new orders to date, bringing its net order book to S$8.6 billion, with deliveries extending into 2020. Since the start of the year, Keppel Corp’s global workforce has been further reduced by 9.4 per cent or about 2,800 workers, of which 2,300 are from overseas yards, while 500 are from those in Singapore, said Mr Loh.

“Apart from optimising our resources across our yards, we are also committed to managing our overheads effectively … If we need to further right-size, we will do so.”

While its offshore & marine, infrastructure and investment divisions remained under pressure, Keppel Corp’s property division has been performing well.

The company said it is tapping into demand in recovering property markets across Asia, where Keppel Land has about 20,000 homes in its portfolio ready for launch during the next two years, mostly in China.

Keppel Land is also actively strengthening its portfolio of commercial properties, which has increased to more than 1 million sqm of gross floor area.