SINGAPORE -- Keppel Corp. is still struggling in its core offshore oil rig business, despite the recent recovery in oil prices.
The Singaporean state-linked conglomerate on Thursday said its net profit for the January-March quarter rose 34% from a year ago to 337 million Singapore dollars ($257 million) due to a gain from a property divestment in China.
However, the offshore and marine segment, which includes the oil rig business, booked a 31% revenue decline to S$332 million, resulting in a quarterly loss of S$22 million. This is worse than a profit of S$95,000 reported in the same quarter in 2017.
Keppel's rig business has suffered from the oil price recession in the last few years.
The benchmark Dubai crude oil price was above $60 per barrel during the January-March quarter, which compared to around $50 per barrel a year ago. Nevertheless, the latest result showed that the recent increase in oil prices has yet to contribute to Keppel's work volume.
"Oil prices have improved, but it will take a while before we see a recovery," Chief Executive Loh Chin Hua said during a webcast briefing. He pointed out that the jackup rig market "continues to be plagued by a supply overhang, with both utilization and day rates remaining soft."
He said the company is seeing increasing confidence in the sector. The net order book increased to S$4.3 billion as of the end of March, from S$3.9 billion at the end of December.
The latest results highlighted Keppel's increasing reliance on the property business. Profit for the segment hit S$377 million, up about four-fold from S$94 million a year ago. The company says it has divested a stake in a residential and recreational project in China, which yielded a net gain of S$289 million.
Loh stressed that Vietnam is a focus for its property business. About 6,000 homes are ready to launch by 2020 in the country, and commercial properties with a gross floor area of 280,000 sq. meter are under development there.
Keppel's share price ended up 2.15% at S$8.07 on Thursday, while the benchmark ST Index rose 1.15% to 3,598.73. Keppel announced the results after the close of trading.