Keppel posts 23.7% rise in Q1 earnings
Conglomerate sees weakness in offshore business, focuses on other growth areas
JUSTINA LEE, Nikkei staff writer
SINGAPORE -- State-backed conglomerate Keppel Corp. posted a net profit of 260.3 million Singapore dollars ($186.3 million) for its first quarter ended March, up 23.7% on the year, mainly due to higher contributions from its investments and infrastructure divisions.
Revenue fell 28.4% to S$1.24 billion on the year. Higher revenues from its infrastructure and investment divisions could not fully offset the decline in its offshore and marine business or its property arm.
Its offshore and marine division suffered,with revenue falling by 41% to S$483 million. Keppel has seen profit from its core oil rig-building business plunge due to low global oil prices and weak demand for new offshore oil rigs.
The tough conditions in the offshore business hit the company hard, forcing it to trim the workforce in its offshore and marine sector. For the first quarter, it laid off about 1,250 staff. Since the start of 2015, Keppel has reduced its global direct workforce in the division by close to 18,000.
Loh Chin Hua, Keppel's chief executive, noted that despite the increased optimism in the market from improving oil prices, the offshore business "continues to face very challenging conditions." He added that it "will take some time before the industry fully recovers" due to various factors including the oversupply of rigs and support vessels.
With the offshore business facing strong headwinds, Keppel is looking for new areas to lift its bottom line, such as energy and environmental infrastructure projects.
Its Keppel Infrastructure unit signed an agreement in April with the Singapore Economic Development Board to develop, own and operate a state-of-the-art gasification facility. This will help to meet the anticipated future demands of Singapore's refining and chemicals industries.