Bloomberg News

Keppel Third-Quarter Net Rises 33% on Increase in Rig Demand

October 20, 2011

(Updates with comment from company in fourth paragraph.)

Oct. 20 (Bloomberg) -- Keppel Corp., the world’s largest oil-rig maker, posted a 33 percent jump in third-quarter profit as higher crude prices stoked demand for drilling equipment.

Net income climbed to S$406.1 million ($320 million) from a restated S$304.6 million a year earlier, the company said in a statement to the Singapore stock exchange today. Sales gained 18 percent to S$2.7 billion.

Keppel has won a record S$8.7 billion of new orders so far this year as energy companies boost spending on offshore and deepwater drilling equipment to benefit from an increase in oil prices. Royal Dutch Shell Plc has said it plans to spend $100 billion on projects in four years through 2014.

The offshore and marine business “sees good prospects for its deepwater solutions with the projected increase in deepwater capital expenditure for the next few years,” the company said in the statement. “Drilling in the North Sea has been revitalized by new major oil finds and the Gulf of Mexico is returning gradually to normalcy with the issue of permits.”

Keppel fell 0.8 percent to close at S$8.78 in Singapore trading before the earnings announcement. The shares have dropped 15 percent this year, compared with the 30-stock Straits Times Index’s 16 percent decline.

Order Book

New orders this year boosted the company’s order book to S$9 billion, with deliveries stretching into 2014, according to the statement.

Keppel’s offshore arm, which makes products including jackup rigs and deepwater equipment, reported a 38 percent increase in third-quarter profit to S$340 million, while sales rose 12 percent to S$1.64 billion. Operating profit gained 54 percent to S$426 million, widening the margin to sales to 26 percent from 19 percent a year earlier.

The company doesn’t expect to maintain margins of more than 20 percent as the value of orders it won recently are at lower prices than those won before the credit crisis, Chief Executive Officer Choo Chiau Beng said today.

Keppel’s property unit, Keppel Land Ltd., said yesterday third-quarter net income gained 6.6 percent to S$58 million. Sales fell 14 percent to S$111.7 million. Keppel also has a utilities arm.

--Editors: Nicholas Wadhams, Terje Langeland

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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