Keppel Corp., a Singapore conglomerate, posted a 41 percent drop in net profit for the first quarter of 2016.
The company’s profit was negatively affected by Keppel’s offshore rig building business, Keppel Offshore & Marine, as the low oil prices are taking a toll on everybody linked to the oil and gas industry. Aside from building offshore rigs for the oil and gas industry, Keppel also deals with properties and infrastructure.
Keppel Offshore & Marine recorded a 53 percent drop in net profit compared to the first quarter of 2015. Net profit was $95 million Singapore dollars.
The rig builder in the first quarter delivered three jack-up drilling rigs, one liftboat and one transformer platform.
Affected by the lack of demand for their services as the oil company are pulling breaks on drilling, the drillers are deferring their newbuild rig orders, thus affecting the rig builders. Keppel is no exception.
Loh Chin Hua, Keppel CEO said: “Earlier this year, Transocean and Ensco have announced the deferment of their projects. Deliveries of two other jack-ups, for Clearwater and BOT Lease Co, have also been deferred to next year, while deliveries of two semis are deferred from 2017 to 2019/2020. The contracts are still valid, and we are working towards delivering them based on the new schedules agreed upon with our customers.
However, Loh Chin Hua said Keppel wouldn’t make provisions for any of these contracts currently, but he said Keppel was monitoring the situation carefully.
On the workforce front, the CEO said Keppel was “rightsizing” the organization in order to remain profitable.
“Since the start of 2016, our global workforce has been further reduced by 9.4% or about 2,800 headcount, of which 2,300 are from overseas yards, while 500 are from those in Singapore.”