Singapore’s rig builder Keppel Offshore & Marine, hit by challenging market conditions and a drop in workload, in the third quarter 2016 cut its workforce by 3.080 people; 660 in Singapore and 2,420 in overseas yards.
This means that for the first nine months Keppel O&M has reduced its direct workforce by close to 8,000 or around 26%.
During the third quarter Keppel Offshore & Marine, part of Keppel conglomerate, recorded revenue of $516 million, down from $1.4 billion registered in the same quarter a year ago.
Net profit fell to eleven million, a 93 percent drop from $166 million in the third quarter of 2015.
The company’s CEO Loh Chin Hua has acknowledged that the landscape for the offshore and marine business remains challenging, despite the recent OPEC deal to stabilize oil prices.
“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,” the CEO said.
He said that with priority given to strengthening their balance sheets, the oil majors are expected to continue to hold back on offshore exploration expenditure.
As for the workforce reduction, the CEO said that this has mostly been done through natural attrition. However, this is now set to change, as Keppel will start looking into the early termination of contracts and “selective retrenchment” in Singapore, in line with the drop in workload. He described the measures as painful but needed to keep the company profitable.