Keppel T&T has appointed a financial adviser who is now engaging potential buyers.
SINGAPORE (REUTERS, THE BUSINESS TIMES) – Keppel Corp said on Thursday (Jan 28) its struggling offshore and marine (O&M) segment will exit the rig-building business as part of a previously flagged strategic review.
Its unit Keppel O&M will focus instead on areas such as renewables and gas solutions, and will have a “significantly reduced headcount” as part of the restructuring, Keppel said.
After completing existing rigs under construction, Keppel O&M will not undertake any new project requiring large upfront capex or without milestone payments.
The company will be restructured into three parts, separating construction and ownership of legacy drilling rig assets from its core operations, which will be “slimmer, asset-light and people-light”.
“When we succeed in executing these plans, we will see a transformed and more competitive Keppel O&M, well-placed to support the global energy transition,” said CEO Loh Chin Hua.
The restructuring begins with immediate effect and is expected to be executed over the next two to three years.
Mr Loh said Keppel is also “exploring inorganic options” for the O&M business, with no assurance that any transaction will materialise.
As for the logistics business, Keppel has decided to sharpen its focus and divest its logistics and channel management business to a third party, which may be able to provide a better eco-system to scale up this business, he said.
Keppel T&T has appointed a financial adviser who is now engaging potential buyers, he added.
Keppel and its smaller rival Sembcorp Marine were among the world’s biggest oil rig-builders, but low oil prices and an oversupply of rigs have hit the business hard.
The company, whose businesses include property development and telecommunications, separately on Thursday reported a net loss of $506 million for 2020, compared to a net profit of $707 million a year earlier.
Its full-year results included impairments of $952 million mainly due to the O&M business, the bulk of which was recognised in the second quarter.
Revenue for FY20 was down 13.3 per cent to $6.57 billion, mostly due to lower contributions from the energy & environment, urban development and asset management segments, offset by higher revenue from connectivity.
For the second-half of 2020, Keppel made a net profit of $31.3 million, down 91.1 per cent from a year ago on the back of decreased contributions across segments, with energy & environment hard-hit in particular. Revenue fell 20.5 per cent to $3.39 billion.
Earnings per share (EPS) for H2 2020 was 1.7 cents, down 91 per cent from 19.3 cents the same period a year ago.
For the full year, loss per share was 27.8 cents, compared with EPS of 38.9 cents the previous year.
A final cash dividend of seven cents was declared for FY20, down from 12 cents previously.
Keppel’s shares closed at $5.46, down 12 cents or 2.15 per cent prior to the announcement.
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