Keppel O&M outlook buoyed by contract wins

The momentum for new orders that started in 2017 could continue in 2018.

Keppel’s offshore and marine segment is set to see an incremental recovery from losses in H1 2018, OCBC Investment Research and DBS Equity Research said.

OCBC thinks that the Q2 net loss of $16.7m has improved from the $23m net loss in the preceding quarter.

Keppel said that the loss was attributed to lower operating results, lower share of associated companies’ profits, and higher taxes in overseas operations. Lack of divestment gains from Keppel Verolme partly offset by lower net interest expense also contributed to the loss.

Also read: Keppel Q2 profits up 44.4% to $246.16m

They added that the rig market continued to be weighed down by a supply overhang despite the growing optimism in the O&M industry. Despite this, they noted that there has been a rise in the number of floating production projects awarded over the past year.

“O&M’s contract wins in 2017 bucked the declining trend as the division clinched $1.2b worth of new orders, which doubled over 2016,” DBS noted. “The momentum should continue into 2018 with $3b new orders assumed.”

In June, Keppel O&M won new contracts amounting to about $1.2b which is higher than the total value of new orders secured in FY 2017.