The ongoing slump in the energy sector has sent third-quarter earnings at Keppel Corp down by 38.1 per cent while senior management have taken a pay cut.
Chief executive Loh Chin Hua told a briefing yesterday the voluntary pay cuts are a "show of solidarity" by senior management. He said those from Keppel Offshore & Marine (Keppel O&M) as well as the most senior officers in the group will likely take the biggest hit but did not disclose the size of the cuts.
In addition, lower directors' fees for 2016 will be proposed at next year's annual general meeting.
In the quarter ended on Sept 30, the axe has also fallen on 3,080 workers - 660 here and 2,420 in Keppel O&M's overseas yards. That brought the total job cuts for the first nine months of the year to about 8,000 or 26 per cent of Keppel O&M's workforce, and more cuts are expected.
Mr Loh said the company will increasingly look into "early termination of contracts and selective retrenchment in Singapore" in line with the drop in workload, while making sure it retains its core capabilities.
"In the short term, painful measures which have kept Keppel O&M profitable despite the sharp drop in revenues and operating profits will have to continue," he added.
Brazilian oil rig firm Sete Brasil, which is facing bankruptcy, has proved a major cause for concern as it has been unable to pay Keppel for work undertaken on rigs.
Keppel O&M chief executive Chow Yew Yuen told the briefing that the company had not received additional requests for contract deferments or cancellations during the quarter, although it is looking at mothballing some yards with low work volumes.
Mr Loh also reiterated that a $230 million provision for projects related to Sete Brasil remains sufficient.
Keppel Corp's net profit for the three months to Sept 30 came in at $224.5 million, well down from $362.9 million in the same period a year ago.
Total revenue for the group slumped 40.2 per cent to $1.46 billion - dragged down largely by lower work volume at the offshore and marine division, the deferment of some projects and the suspension of the Sete Brasil contracts.
Turnover from the property segment improved thanks to higher sales in Singapore, though this was offset by lower revenue in China. Revenue at the infrastructure division fell due to lower prices and volumes in the power and gas business.
Mr Loh said Keppel remains resilient despite the challenging environment thanks to its multi-business strategy. While at the offshore and marine division, profits fell 93 per cent to $11 million, the property division's profits were 23 per cent higher at $157 million, making up 70 per cent of the group's net profit.
He also noted that the infrastructure business provides steady recurring income. The data centre and asset management businesses serve as new areas of growth.
Earnings per share for the quarter was down 38 per cent to 12.4 cents, while net asset value per share was flat at $6.13 as at Sept 30 compared with Dec 31 last year. Keppel shares closed two cents or 0.4 per cent higher at $5.44 yesterday, before the results were released.