The downturn in the energy sector shows no signs of abating and could mean an "extended winter" for Keppel Corporation, according to the rig builder's chief executive.
However, Mr Loh Chin Hua noted that its offshore and marine unit, Keppel Offshore & Marine (Keppel O&M), is "rightsizing its operations and staying vigilant... while at the same time building new capabilities and positioning itself to seize opportunities when the upturn comes".
Mr Loh told Keppel staff in a New Year message: "A strong order backlog of about $10 billion, carefully built up over time, will bolster us in the year ahead as we continue to strengthen and tone up our offshore and marine division.
"We must fully utilise this period to prudently invest in strategic areas and build new muscles that will propel us as the front runner in the upturn."
Last August, for instance, Keppel Corp announced that Keppel O&M was buying Cameron International's LeTourneau rig design and rig-kit business for US$100 million (S$142 million) - a move that will "not only broaden our suite of jack- up rig designs, but also give us enhanced capabilities to provide aftermarket sales and services to customers", Mr Loh said.
The collapse in oil prices since June 2014, which led to 11-year lows last month, has hammered energy companies worldwide amid an ever-expanding supply glut and slowing demand.
Keppel Corp posted a 12.4 per cent drop in net profit to $362.9 million for the third quarter to Sept 30 last year, largely because of the poor performance in its offshore and marine business.
But its other businesses have helped steady the group as a whole, said Mr Loh.
Last July, it completed the privatisation of Keppel Land, of which it now owns 99.3 per cent.
It also earlier launched Keppel DC Reit (real estate investment trust) - the first data centre Reit to be listed in Asia. Keppel also combined Keppel Infrastructure Trust with CitySpring Infrastructure Trust and injected 51 per cent of Keppel Merlimau Cogen Plant into the enlarged entity, becoming Singapore’s flagship infrastructure business trust..
"Overall, higher contributions from property and infrastructure in the past year have helped cushion the impact of a considerable fall in net profit from offshore and marine," said Mr Loh.
"Had we been a single business company, our results would have been much weaker."
In his message, Mr Loh also reiterated the need for the group to harness its own strengths and nurture relationships across its various business units, while investing in the future. "We are taking bold strides amid the global economic and industry headwinds in our path, anchoring on our multi-business strategy and harnessing our collective strengths to seize opportunities and create value," he said.
"A clenched fist delivers a strong punch. In spite of the downturn, we will march forward as One Keppel."
Correction note: An earlier version of this story said Keppel DC Reit was Singapore's flagship infrastructure business trust. We are sorry for the error.