Keppel may mothball some yards as it faces long, harsh winter

Having continued to reduce its workforce worldwide this year, with direct staff reduced by 4,900, or 16% of the workforce, in the first half 2016 Keppel Corp ceo Loh Chin Hua said at it half year results briefing the company “may mothball yards with low work volumes”.

Keppel’s net orderbook has fallen to SGD4.3bn ($3.17bn), its lowest level since 2010, following the removal of six semi-submersibles for Sete Brasil after the Brazilian company filed for judicial recovery. The Sete Brasil projects accounted for around SGD4bn of the net orderbook.

As a result of the lower orderbook YY Chow, ceo of Keppel Offshore & Marine noted the company had “some overcapacity”.

“We do not rule out that we will mothball some of our facilities so that we can reduce overhead,” he said.

Quizzed as to which yards could be mothballed he said that had not been decided yet.

Loh said Keppel had to be prepared for “not only a long winter, but a harsh one”.

Since the beginning of 2015 Keppel Offshore & Marine has reduced its direct workforce globally by 11,000 and its sub-contracted labour by 8,600.

“Our cost-cutting and rightsizing efforts will continue. Beyond natural attrition, we will look at ways to re-organise and streamline our yards and resources to become leaner and more efficient,” Loh said.

The company has also reduced overheads by 20% since the start of 2015.

Keppel reported a first half net profit of SGD416m down 45% on the SGD757m it made in the same period in 2015. Revenues slid 37% in the first half of the year to SGD3.37m.

Offshore and marine reported a profit of SGD156m in the first half of 2016 down 59% on the SGD376m it made in the same period a year earlier. The division’s share of total group profit fell to 37% compared to 49% in the first half of 2015.

Revenues from offshore and marine plunged 56% in the first half of the year to SGD1.54bn.