The persistent weakness in the offshore and marine division continued to drag down second- quarter earnings at conglomerate Keppel Corporation.
Net profit for the three months to June 30 dropped 2.3 per cent to $396.7 million compared with the same period a year earlier, it announced yesterday.
Revenue sank 19.3 per cent to $2.56 billion, largely due to Keppel Offshore & Marine (Keppel O&M), which accounts for the bulk of the group's turnover.
The company posted a 23 per cent slump in turnover to $1.58 billion on the back of a lower volume of work and some projects being deferred.
While KepCorp's infrastructure and investment divisions also posted declines, its property business bucked the trend, turning in a 24 per cent increase in revenue to $431 million, thanks to higher revenue from China.
AT A GLANCE
REVENUE: $2.56 billion (-19.3%)
NET PROFIT: $396.7 million (-2.3%)
DIVIDEND PER SHARE: 12 cents
KepCorp owns more than 99 per cent of Keppel Land, which was de-listed on the Singapore Exchange on July 16.
Earnings per share dipped 1.8 per cent to 21.9 cents, while net asset value per share jumped 4 per cent to $5.96 as at June 30, up from the $5.73 as at Dec 31 last year.
Net profit rose 1.6 per cent to $756.9 million for the half year while revenue fell 12.9 per cent to $5.38 billion. Earnings per share rose 1.7 per cent to 41.7 cents.
KepCorp has proposed an interim cash dividend of 12 cents per share, unchanged from last year, which will be paid out on Aug 13.
Chief executive Loh Chin Hua told a briefing yesterday that slower growth and greater volatility in the global economic climate will continue to weigh on the group.
Lower oil prices for a sustained period, too, is "a reality that the oil and gas industry needs to grapple with", he added. Global oil prices fell steeply last June, with Brent crude now at around US$60 (S$82) a barrel, down from the US$140 then.
Keppel O&M chief executive Chow Yew Yuen said that the delivery of its first drillship will be pushed back to the second quarter of 2017 instead of the end of next year as planned, "based on current market conditions".
"But we are actively marketing the drillship now. It's a differentiated product and we believe there will be demand," added Mr Chow.
He also said that the firm will allow natural attrition and employ sub-contractors to carry out some of its work.
"Even as we await the upturn in the drilling market, we are not resting on our laurels," said Mr Loh.
He added that it will focus on niche markets in which "there is still good demand".
"Our expanding suite of innovative solutions will put us in pole position to capture more work in the non-drilling markets, which up till now remain resilient."
Keppel O&M's order book stands at $11 billion to 2020 but it has yet to secure a single rig order this year.
"We have a strong track record of agility and turning adversity into advantage. Our multi-business approach will help us weather the storm and emerge stronger on the other side," said Mr Loh.
"There will also be opportunities along the way. We will certainly not waste this downturn."
KepCorp shares closed two cents up at $8.16 yesterday.