Singaporean conglomerate Keppel Corporation reported its highest profit in six years since the offshore downturn.
The company reported an overall FY 2021 net profit of S$1.02 billion (USD $740 million) bolstered by improved performance across all business segments. The result marks a sharp reversal from FY 2020’s net loss of S$506 million.
Keppel’s offshore and marine segment, Keppel O&M, one of the world’s largest offshore rig builders, recorded a net loss of S$77 million in FY 2021, a significant improvement from the S$1.1 billion loss in FY 2020.
Keppel O&M secured S$3.5 billion worth of new orders last year and its net orderbook stood at S$5.1 billion at the end of 2021, of which 39% comprised renewables and gas solutions.
The Keppel O&M’s business has been hard hit by the offshore market downturn after oil prices crashed from over $100 per barrel in 2014-2015. Rising oil prices could now help revitalize the sector.
“With rising oil prices, the offshore drilling rig market has shown signs of improvement, and utilisation and dayrates for modern jackups are projected to rise even further over the next few years. With improving market conditions, Keppel is hopeful that Keppel O&M’s legacy rigs can be substantially monetised over the next three to five years,” the company said.
The company also provided an update on its proposed merger with Singapore offshore and marine engineering rival Sembcorp Marine. The merger is reported to be “progressing steadily”, with both parties “undertaking detailed diligence” and working towards signing definitive agreements by the end of the first quarter of this year.
Separately, Keppel also announced a S$500 million share buyback program and final cash dividend of S$0.21 per share, bringing FY 2021’s total distribution to S$0.33 per share, more than triple FY 2020’s S$0.10 dividend distribution.
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