Keppel's profit drops 65% on provisions as job cuts continue

Keppel reported a 65 per cent drop in profit in the fourth quarter.
Keppel reported a 65 per cent drop in profit in the fourth quarter. PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Keppel Corp, the world's biggest oil rig builder, reported a 65 per cent drop in profit in the fourth quarter as it predicted "challenging conditions" at its offshore business to remain for some time.

Net income fell to S$143 million in the three months through December, Keppel said in a statement to the Singapore stock exchange Thursday. The profit was after additional provisions for impairment of S$313 million, it said. Sales fell 22 percent S$1.94 billion.

At its offshore and marine division, the company reduced its direct workforce by 2,620, or about 11.8 per cent from the previous quarter, as part of efforts to pare costs by cutting yard capacity and mothballing yards. Keppel and peers have been slashing jobs as demand for offshore drilling rigs slumped amid weak oil prices. Though a decision by OPEC to reduce output renewed optimism, Keppel said it isn't expecting a quick recovery.

"We are thus prepared for the challenging conditions in the offshore business to remain for some time," chief executive officer Loh Chin Hua said in the statement.

If revaluations, impairments and divestments and major provisions were stripped out, the company had a net income of S$300 million, comparable to a year earlier, it said in the statement.