Keppel Posts Fifth Straight Quarterly Profit Drop

Q2 net profit S$205 mln vs S$397 mln year ago; offshore and marine revenue down 54 pct.

Second-quarter profits at Singaporean rigbuilder Keppel Corp fell 48 percent from a year ago, fifth straight decline in quarterly profit, weighed down by lower revenues at its offshore and marine segment.

The conglomerate, whose businesses include property development and infrastructure, and its smaller rival Sembcorp Marine (SMBMF) have been hit by the 60 percent drop in oil prices since mid-2014. Still, oil prices have recovered more than 70 percent from the lows touched in January.

"Given the oversupply in the rig market and falling day rates, we do not expect demand for drilling rigs to return soon," said Loh Chin Hua, chief executive officer. "The industry's capex cycle will take time to stabilise and recover."

Keppel posted a net profit of S$205 million ($152 million)for the three months to June, compared with S$397 million a year ago. Revenue fell 37 percent to S$1.6 billion.

Pre-tax earnings at Keppel's key offshore and marine division, which builds offshore drilling rigs and support vessels, dropped 60 percent to S$88 million. The segment's revenue fell 54 percent.

The division recorded a net order book of S$4.3 billion versus S$8.6 billion in the preceding three months. The company said it has now excluded projects worth S$4 billion from rig leaser Sete Brasil, which has filed for bankruptcy protection. Keppel has stopped work on Sete's rigs since end-2015.

It said it has received requests to defer the delivery of three jackup rigs for Grupo R and one jackup for Parden Holdings to next year.

The company, which has been cutting costs and reducing headcount in its offshore and marine segment, said it may mothball yards with low work volumes, if necessary.

It approved an interim dividend of 8 Singapore cents a share, compared with 12 cents a year ago.

Revenues at Keppel's property division rose 16 percent as China sales climbed. It sold 2,140 homes in the first half of 2016, an 18 percent increase.

Keppel shares, valued at $7.5 billion, have lost nearly 14 percent so far this year, compared with a 2 percent gain in the main index. ($1 = 1.3533 Singapore dollars) (Reporting By Aradhana Aravindan