Keppel Shuts Down Three Yards in Singapore
Keppel Corp, the world's biggest oil rig builder, is still hard hit by the downturn in the oil industry and will now shut down three yards in its homeland.
Singapore-based offshore company Keppel reduced its direct work force by about one third. The workforce has been reduced by 2,620 employees in the fourth quarter a cut of 11.8%.
For 2016 as a whole Keppel reduced its direct workforce by 10,600, some 3,800, and about 6,800 overseas, or 35% of its total direct workforce. The number of sub-contractors in Singapore has also been reduced by 3,300.
Keppel and peers have been slashing jobs as demand for offshore drilling rigs slumped amid weak oil prices. Though a decision by OPEC to reduce output renewed optimism, Keppel said it isn't expecting a quick recovery.
"While spending by oil majors is expected to increase, we do not envisage a quick recovery for the offshore business, which continues to be under pressure from weak utilisation of the existing operating fleet, coupled with a supply overhang of new builds," Reuters quoted Chief Executive Loh Chin Hua as saying.
The bottom line landed at US$ 552.1 million, which is the lowest profit since 2006, according to a statement from the company. This was far short of an average analysts' estimate of S$895 million, Thomson Reuters data shows.
Keppel and Sembcorp have both suffered from an oversupply of offshore oil drilling rigs, with customers delaying existing contracts and staying away from new orders amid weak oil prices that are at about half their 2014 peaks.
