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Profit Falls at Singaporean Rig Builder

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October 21, 2014

The skyline at Keppel Offshore and Marine, Singapore. (c) R.Almeida/gCaptain

reuters logoSINGAPORE, Oct 21 (Reuters) – Singaporean industrial conglomerate Keppel Corp Ltd reported a 9 percent fall in profit in the third quarter, pulled down by weak sales in its property division at home and in China.

Net profit in July-September was S$414 million ($325.8 million), Keppel said in a statement on Tuesday. Pretax profit rose 27 percent in its offshore and marine arm, but fell 37 percent in its property division.

Property sales weakened in China and Singapore, the company’s core property markets, where the governments have been trying to curb rapid rises in prices.

In the offshore and marine business, where Keppel builds oil rigs and vessels, Keppel said the need for international oil companies (IOCs) to keep spending on drilling remains strong over the long term, even as they are cutting capital expenditure after a period of heavy investment.

“We believe that with the depleting (oil) reserves and aging (rig) fleet, the industry fundamentals are still strong,” said Chief Executive Loh Chin Hua in a prepared speech to investors.

“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, the world’s largest builder of jack-up rigs – rigs which stand on the sea bed – said its offshore and marine division received S$3.7 billion worth of new orders in the year to date, taking its outstanding order book to S$12.7 billion. At the end of 2013, Keppel’s order book stood at S$14.2 billion.

Shares of Keppel rose nearly 1 percent to S$9.70 on Tuesday. The stock has fallen 13 percent so far this year and is on course for its sharpest annual fall since 2008. By comparison, the benchmark Straits Times Index this year has risen nearly 1 percent.

($1 = 1.2707 Singapore dollar) (Reporting by Rujun Shen; Editing by Christopher Cushing)

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