Singapore’s offshore rig and vessel builder Keppel Offshore & Marine saw its quarterly profit halved despite a significant increase in revenues.
Keppel Corporation said on Wednesday that its Offshore & Marine (O&M) Division registered a net profit of S$3 million ($2.1 million) for 1Q 2020, compared to a net profit of S$6 million ($4.2 million) a year ago.
This was due mainly to the share of losses from associated companies which had offset the Division’s stronger operating results.
The company’s revenues for 1Q 2020 were S$569 million ($401.7 million), a 71 per cent increase when compared to revenues of S$332 million ($234.4 million) in the same period last year.
This was mainly attributable to higher revenue recognition from ongoing projects such as Awilco’s semi-submersible rig, Golar Gimi FLNG, Borr Drilling jack-up rig, and Pasha LNG containership.
In Singapore, Keppel O&M’s yards continue to provide essential services in ship/vessel repair and maintenance and overhaul during the circuit breaker with reduced manpower and various precautionary measures in place.
Most of the company’s overseas yards, except for those in the Philippines, are also operational, albeit, with varying restrictions, the company said.
Diversification from oil projects
Keppel O&M noted that its efforts to rightsize its operations and diversify from oil-related projects over the past few years is helping it to remain resilient amid challenging conditions posed by the COVID-19 pandemic and the collapse in oil prices.
Notably, renewables and gas-related solutions, make up over 70 per cent of the Division’s net order book of S$4 billion ($2.8 billion) as at end-March 2020.
Keppel said it will continue to actively pursue opportunities in gas and renewables, and also repurpose Keppel O&M’s technology for other floating infrastructure uses.
Loh Chin Hua , Chief Executive Officer of Keppel Corporation, said: “Given the current highly volatile environment and low prices, oil majors are curtailing E&P spending, which will push back the nascent recovery that we had just begun to see in the O&M sector .
“We expect the O&M business to face very challenging conditions in the near future. We would also need to keep a close watch on customers and associates who would be affected if there is a prolonged downturn in oil prices”.