Keppel, the world’s largest oil-rig builder, has reported a 65 per cent drop in profit in the fourth quarter as it predicted “challenging conditions” at its offshore business to remain for some time.
Net income fell to S$143 million (Dh370.9m) in the three months through December from S$404.8m a year ago, Keppel said in a statement to the Singapore stock exchange on Thursday. The profit was after additional provisions for impairment of S$313m, it said. Sales fell 22 per cent S$1.94 billion.
At its offshore and marine division, the company reduced its direct workforce by 2,620, or about 11.8 per cent from the previous quarter, as part of efforts to pare costs by cutting yard capacity and mothballing yards. Keppel and peers have been slashing jobs as demand for offshore drilling rigs slumped amid weak oil prices. Although a decision by Opec to reduce output renewed optimism, Keppel said it is not expecting a quick recovery.
“We are thus prepared for the challenging conditions in the offshore business to remain for some time,” said the chief executive Loh Chin Hua.
If revaluations, impairments and divestments and major provisions were stripped out, the company had a net income of S$300m, comparable to a year earlier, it said.
Keppel proposed a final dividend of 12 Singapore cents a share, taking the total for the fiscal year to 20 cents.
For the whole of 2016, Keppel cut its direct workforce by 10,600, or 35 per cent, at its offshore and marine division, with 3,800 in Singapore and 6,800 overseas
In tandem, it is cutting yard capacity and has mothballed two overseas yards; in Singapore, it’s in the process of closing three yards.
* Bloomberg
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