Keppel Corporation warned that its second-quarter and half-year results out next week will be "significantly and adversely impacted" by impairments relating mainly to its offshore and marine (O&M) unit.

Keppel said its profit guidance yesterday followed a review of the assumptions used to assess the carrying values of certain assets, including receivable balances and stocks under work-in-progress in relation to the O&M business, as well as investments in associated firms.

The review was carried out in the light of the pandemic, which has severely impacted the global economy and brought about significant market volatility and uncertainty, including a sharp reduction in demand for oil.

Low crude prices are forcing oil majors to curtail exploration and production spending, which has adversely impacted day rates and utilisation rates of the O&M industry generally and Keppel's business more specifically, it said.

Earlier this month, Keppel O&M said it has, through its wholly owned subsidiaries in Singapore and Brazil, secured two contracts worth a combined value of about $73 million.

The group releases its financial results on July 30.

Keppel Corp shares closed down 4 per cent at $5.71 yesterday.

Ann Williams