Shipbuilding: Keppel Sees Rig Recovery, Profits Up

Singaporean conglomerate Keppel Corp posted improved results for the fourth quarter, helped by narrower losses in its offshore and marine division, and said it was seeing signs of recovery in the rig industry.

The company on Thursday reported a net profit of S$135 million ($99.2 million) for the quarter ended December, compared with a net loss of S$492 million a year earlier, when it accounted for a fine its rig-building unit agreed to pay to resolve bribery charges in Brazil.

The latest profit was 6 percent higher than a profit of S$127 million it would have reported a year earlier, excluding the fine and related costs.

Revenue for the quarter rose 9 percent to S$1.68 billion.

The company, whose businesses range from rig building to property development, reported an annual profit of S$944 million.

Net loss at its offshore and marine division, which builds drilling rigs and support vessels, narrowed by 67 percent to S$71 million in the fourth quarter on improved operating performance. The loss was mainly attributed to provisions related to contracts from Sete Brasil Participacoes SA, a Brazilian client that has filed for bankruptcy protection.

"With the gradually declining rig supply overhang, as well as increased tendering activity, there are signs of improvements in the offshore rig sector, though we do not envisage a V-shaped recovery," Loh Chin Hua, the company's chief executive officer, said at its results briefing.

The property division's net profit fell 39 percent to S$174 million, with lower fair value gains on investment properties.

"In China and Singapore, property market cooling measures have affected sentiments, although we continue to see healthy demand in key Chinese cities such as Chengdu and Nanjing, where we have deepened our presence," Loh said.

The company expects to recognise revenue for about 8,410 overseas homes that have already been sold amounting to about S$2.7 billion, upon completion and handover from 2019 to 2021.

Keppel has been investing in new businesses such as senior living and renewable energy infrastructure as it seeks new engines of growth.
Keppel and Singapore Press Holdings, which together control 34.3 percent of M1, said in September they would offer S$2.06 ($1.50) per share for a majority ownership of the telecom operator. Earlier this week, they said they will not raise their offer price. ($1 = 1.3605 Singapore dollars) 

(Reuters reporting by Aradhana Aravindan; Editing by Gopakumar Warrier)

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