Keppel O&M's Net Profit Grows 17% to $201.5M in 3Q 2014

Keppel Corporation's offshore and marine subsidiary Keppel Offshore & Marine (Keppel O&M) posted a 17 percent increase in net profit for the third quarter of 2014 (3Q 2014) to $201.5 million (SGD 252 million) compared to $172 million (SGD 215 million) a year ago, boosted by higher revenue recognition from ongoing projects, the company said Tuesday when it released its quarterly financial results.

Keppel O&M contribution to Keppel's net profit rose to 61 percent in 3Q 2014 compared to 3Q 2013's 47 percent, while its revenue share increased to 69 percent from 52 percent in the same period. Keppel O&M posted revenue of $1.76 billion (SGD 2.199 billion), up 43 percent from $1.23 billion (SGD 1.535 billion).

Keppel O&M has a net orderbook of $10.15 billion (SGD 12.7 billion) stretching into 2019, supported by $376.7 million (SGD 471 million) contracts secured in 3Q 2014, comprising a jackup, a floating production, storage and offloading (FPSO) conversion, a semisubmersible barge as well as repairs to a jackup, a semisub and a platform.

While sentiments in the offshore and marine sector have been negatively impacted following a cutback in capital expenditure (capex) by international oil companies (IOC), lower dayrates and the delivery of a number of deepwater rigs and jackups next year, Keppel remains optimistic about prosopects in the sector.

"We believe that with the depleting reserves and ageing fleet, the industry fundamentals are still strong. IOCs are kicking the can down the road but at some point they would have to spend to replenish reserves, and drilling contractors would have to replace their old fleet with new, safer and technologically superior rigs," Keppel CEO Loh Chin Hua said in the press release.

Keppel O&M is also making further in-roads into the floating liquefied natural gas (FLNG) market as the firm expects global FLNG capex to rise significantly over the next six years to around $65 billion by 2020.

Meanwhile, Keppel O&M is expected to commence shortly the $735 million Golar Hilli FLNG conversion project for Golar LNG. The firm revealed that it hopes to seal the contract for a second FLNG conversion project for Golar LNG very soon.


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