Keppel Corp hoping for more rig replacements as Q2 earnings dip

WITH no new rig orders in sight so far this year, conglomerate Keppel Corp is hoping that more oil companies will soon seek to scrap their older rigs as the group reported weaker earnings for the second quarter.

"With the current low oil prices, we are likely to see an acceleration in the replacement cycle for ageing rigs. Days are numbered for many old rigs," Keppel chief executive Loh Chin Hua told a briefing at its Harbourfront office on Thursday. "The scrapping of old rigs will hasten a rebalance of demand and supply in the offshore market and sow the seeds for the upturn."

Continued weakness in the offshore industry weighed on Q2 net profit, which slid 2.3 per cent from the previous year to S$396.72 million.

Revenue for the three months to June 30 also tumbled 19.3 per cent to S$2.56 billion, the group said in a Singapore Exchange filing on Thursday.

The biggest drag came from its offshore and marine division, which was still the largest component of the group's overall earnings even though its property arm and infrastructure division have begun to catch up.

Offshore and marine net profit fell 36 per cent from the previous year to S$173 million for the second quarter.

Its property arm, however, posted a 75 per cent jump in earnings to S$117 million over the same period. The infrastructure division also saw net profit shoot up 194 per cent to S$103 million.

Group earnings per share for Q2 came in at 21.9 Singapore cents, down 1.8 per cent from the previous year. Net asset value per share was S$$5.96 as at June 30, above the S$5.73 as at Dec 31.

Keppel shares closed two cents up at S$8.16 on Thursday before the results were released.