The net orderbook for Keppel O&M as at end-March 2020 stood at SGD4bn ($2.8bn), with renewables and gas-related solutions taking up 70% of the value.
“While progress in securing new orders has slowed due to COVID-19 and the fall in oil prices, Keppel O&M continues to have a sizeable orderbook which will keep our yards occupied for the next two years,” said Loh Chin Hua, ceo of Keppel Corp.
Arising from the lockdowns and disruptions to international supply chains, several of the offshore and marine division’s projects have been delayed.
Force majeure notices have been served to customers of the affected projects and the group is working closely with them to mitigate the impact of COVID-19.
Keppel O&M’s yards continue to provide essential services in ship repair and maintenance and overhaul during Singapore’s ‘circuit breaker’ – a measure to pre-empt escalating coronavirus infections by temporarily shutting down several activities and businesses.
The overseas yards are also operational, except for those in the Philippines.
Keppel O&M has delivered two newbuild projects and an FPSO modification and upgrade project in the first quarter, despite COVID-19.
The company is also setting up a Floating Living Lab off its Tuas shipyard, which will serve as a platform to testbed and commercialise promising power and technology solutions for the marine sector.
“We expect the O&M business to face very challenging conditions in the near future. We would also need to keep a close watch on customers and associates who would be affected if there is a prolonged downturn in oil prices,” Loh said.
“Nevertheless, Keppel O&M is in a stronger position to weather the crisis today, compared to 2015, when the last crisis began,” he added.
Over the past few years, Keppel O&M’s efforts to rightsize its operations and diversify from oil-related projects have helped it to remain resilient amid challenging conditions posed by the COVID-19 pandemic and the collapse in oil prices, compared to the situation a few years ago, when offshore rig building business ground to an abrupt halt after years of rapid growth.
In the first quarter of 2020, Keppel O&M recorded a net profit of SGD3m compared to SGD6m a year ago due mainly to share of losses from associated companies which had offset the division’s stronger operating results. Operating profit for the first quarter was SGD28m, up from SGD3m in the same period of last year.
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