Singapore's Keppel Corp. Offshore & Marine division posted a profit for the full year 2019 citing cost cuts and lower impairment costs.
For the full year, Keppel O&M posted a net profit of S$10 million, a significant increase compared to a loss of S$109 in 2018. The management attributed profitability to increased topline, cost management, and lower impairment provisions.
Also, Keppel O&M saw its revenue rise to 49% to $775 million in the fourth quarter of 2019.
Keppel O&M 4Q revenue increased by $225 mainly due to higher revenue recognition from ongoing projects, such as the Awilco semi-submersible drilling rigs and Golar Gimi FLNG.
The company's 4Q net loss narrowed, with Keppel O&M posting a loss of $8 million, versus a loss of $71 million in the fourth quarter a year ago.
Loh Chin Hua, CEO of Keppel Corporation said the O&M division, famous for its offshore rig building, would continue exploring new markets and opportunities.
60% of orders from gas and renewables
"The Division is also actively capturing opportunities in gas solutions, offshore renewables, production assets, specialized vessels, and floating infrastructure, as well as exploring ways to re-purpose its technology in the offshore industry for other uses," the CEO said.
"The O&M industry continues to show signs of recovery. The utilization and day rates for jack-ups continue to improve, but it would take some time for these to translate into new orders, given the continuing oversupply in the market. The outlook for the floater segment is also positive, with activity and demand expected to increase gradually in the next couple of years," He said.
During 2019, Keppel O&M delivered 13 newbuild and conversion projects. In addition, the company started 2020 with the recent delivery of the fifth out of 11 jack-up rigs that the company is building for Borr Drilling.
"In the near-term, we will continue to actively seek opportunities in the oil and gas production market where a number of project FIDs are expected in 2020. We will also pursue projects in the growing offshore renewables sector, as well as niche segments of the specialized vessel market," the CEO said.
He said that Keppel O&M’s diversification strategy has borne fruit, with gas and renewables making up over 60% of new orders in 2019.
"Our net orderbook stood at S$4.4 billion as at end-2019. To manage the increased workload, Keppel O&M hired 2,800 additional direct employees over the course of 2019, more than we had initially anticipated, and we expect to increase our headcount by a further 1,500 in 2020. With Keppel O&M having returned to profitability, our goal for 2020 is to further enhance the performance of our O&M business," the CEO said.