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Keppel, Sembcorp Marine profit slide on weak offshore business

[SINGAPORE] Singapore's two major rig builders, Keppel Corporation Ltd and Sembcorp Marine Ltd, on Thursday posted sharp declines in their third-quarter profit, reflecting weakness in the offshore rig market.

Keppel, one of the world's biggest offshore drilling rig builders, said its quarterly net profit fell 12 per cent on the year to S$363 million on revenue that slipped 23 per cent to S$2.4 billion.

Meanwhile, cross-town rival Sembcorp Marine said its third-quarter net profit shrivelled 76 per cent on the year to S$32.1 million - its lowest quarterly earnings since the last three months of 2007.

The global rig market has been in the doldrums this year, as exploration and production budget cuts at oil companies have not only weighed on charter rates and reduced the number of jobs available, but also dried up the flow of new rig orders.

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"The group faces many challenges ahead and we will continue to actively manage our balance sheet to maintain a healthy financial position," Sembcorp Marine said in a statement. The firm said deferral of rig deliveries requested by its clients has had an impact on earnings.

Keppel's offshore and marine unit posted a 43 per cent slide in pre-tax profit for the quarter. Its order book dropped to S$10 billion at the end of September, the lowest in more than three years.