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How Did Keppel Corporation Limited’s Offshore & Marine Business Fare In The Latest Quarter?

Keppel Corporation Limited (SGX: BN4) is a conglomerate with major business segments such as Offshore and Marine, Property, Infrastructure, and Investment.

Recently, Keppel Corporation reported its second quarter results for the year ending 31 December 2018. Here, we will have a quick summary of its Offshore and Marine segment’s performance.

Financial performance

Here’s a table showing some key financial numbers for the Offshore and Marine business for the first half of 2018:

Source: Keppel Corporation Results Presentation

Overall, we can see that most metrics worsened on a year-on-year basis.

For the first half of 2018, Offshore and Marine business reported a net loss of S$ 26 million (as opposed to a profit of S$13 million last year) mainly due to “lower operating results, lower share of associated companies’ profit as well as the absence of gain from divestment of Keppel Verolme, partly offset by lower net interest expense”.

The recent upturn in oil price has yet to benefit the Offshore and Marine’s financial performance.

Order book

The change in order book is a good indicator to gauge the overall health of the offshore and marine’s business. This is an important number to monitor since a huge uptick in this figure could mean that the industry has turned around.

As of 30 June 2018, the business division’s net order book stood at S$4.6 billion (excluding Sete Brasil). This is higher than the the net order book (excluding Sete Brasil) of S$3.9 billion, as at 31 December 2017. The higher order book could indicate that the division’s prospects might have turned around recently.

The future

In Keppel Corporation’s latest earnings update, the conglomerate shared a few words on the Offshore and Marine segment’s future:

“The Offshore & Marine Division’s net order book, excluding the Sete rigs, stands at $4.6 billion.The Division will continue to focus on delivering its projects well, exploring new markets and opportunities, investing in R&D and building new capabilities to position itself for the upturn. The Division is also actively capturing opportunities in production assets, specialised vessels, gas solutions, floating infrastructure and offshore renewables, as well as exploring ways to re-purpose its technology in the offshore industry for other uses.”

Conclusion

In sum, Keppel’s Offshore and Marine segment continued to deliver weak results. Yet, with oil price currently at above US$70 per barrel, companies in the oil and gas industry might start to invest in their businesses again. If this is true, investors should see better performance from the Offshore and Marine segment in the near future.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.