Keppel Q3 profit falls 38% on weak rig orders

Keppel Corp's third-quarter earnings have fallen by 38.1 per cent.
Keppel Corp's third-quarter earnings have fallen by 38.1 per cent. PHOTO: REUTERS

SINGAPORE - 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 on Thursday that the voluntary pay cuts are a "show of solidarity" by senior management. He said those from Keppel Offshore & Marine (Keppel O&M) will likely take the biggest hit but did not disclose the size of the pay cuts.

In addition, lower directors' fees for 2016 will be proposed at next year's annual general meeting.

In the quarter ended 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 around 8,000 or 26 per cent of Keppel O&M's workforce, and more cuts are expected.

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 Corp's net profit for the three months to Sept 30 came in at S$224.5 million, well down from S$362.9 million in the same period a year ago.

Total revenue for the group slumped 40.2 per cent to S$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.