Keppel has reported a net loss of S$537 million for the first half of 2020, compared to a net profit of S$356 million last year, after S$930 million of impairments mainly related to Keppel Offshore & Marine.
In a statement sent to Bunkerspot today (30 July), Keppel said that the impairments were related to Keppel O&M’s ‘stranded assets, receivables, stocks and share of impairment provisions from Floatel’.
Keppel added that, but for the impairments, it would have made a net profit of S$393 million for H1 2020, which would have been a 5% year-on-year increase.
The Group’s H1 2020 revenue of S$3,182 million was slightly lower than the S$3,315 million achieved in H1 2019.
Loh Chin Hua, CEO of Keppel Corporation, said: ‘Notwithstanding COVID-19, most of Keppel’s businesses have remained resilient, underpinned by the essential services that we provide. However, due to the impact of the pandemic on the global economy and oil prices, we had to take significant impairments related to the Offshore & Marine business. Without the impairments, Keppel’s net profit for 1H 2020 would have been higher year-on-year, even after including the loss of S$69 million by Keppel O&M.
‘We will forge ahead in this difficult landscape, guided by our Vision 2030, a long-term roadmap which transcends the current crisis. Harnessing the Group’s capabilities and synergy, I am confident that we can emerge stronger.’
The company statement added that ‘further rightsizing will be required at Keppel O&M to ensure that its fixed overhead costs can be brought down in line with the realities for the industry’.
‘To this end, said Keppel, ‘the CEO and management of Keppel O&M have volunteered to take a base salary reduction of between 5% and 10% as a demonstration of collective resolve and to set the tone from the top. In solidarity with Keppel O&M, the senior executive management of Keppel Corporation will also take a base salary reduction of between 5% and 10%, while the directors of Keppel Corporation and Keppel O&M will take a 10% reduction in their annual fees.’
As a result of COVID-19 and measures to contain its spread, Keppel O&M’s Singapore workforce was reduced to about 1,200 persons for most of Q2 2020, from about 24,000 in March 2020. The workforce has since risen to about 5,000 presently.