April 18, 2016 / 10:47 AM / 2 years ago

UPDATE 1-Keppel Corp posts lowest profit in nine years, hit by oil slump

* Net profit down 41 pct to S$211 million

* Offshore & marine revenue slumps 51 pct

* China home sales boost property division (Adds milestone, details,)

SINGAPORE, April 18 (Reuters) - Singapore conglomerate Keppel Corp posted its lowest quarterly profit for nine years, as revenue dropped at its offshore and marine divisions, hurt by project delays and after it suspended work on contracts related to a Brazilian company.

Keppel, one of the world’s largest builders of offshore drilling rigs, has been hit by the 60 percent drop in oil prices since mid-2014. Its businesses include property development and infrastructure.

Keppel’s net profit fell 41 percent to S$211 million ($156 million) for the three months to March 31, with revenue dropping 38 percent to S$1.74 billion. The company cut its global workforce by 9.4 percent, or about 2,800, since the start of the year.

Pre-tax earnings at Keppel’s key offshore and marine division, which builds offshore drilling rigs and support vessels, dropped by 51 percent to S$122 million. The segment’s revenue fell 58 percent to S$818 million.

The division recorded a net order book of S$8.6 billion.

Keppel had stopped work on rigs for Sete Brasil, an indebted affiliate of state-run Petroleo Brasileiro SA Petrobras since end-2015. It said it will not resume construction until payment restarts.

The company said some clients had deferred deliveries of their projects, including two semi-submersible vessels that have been delayed to 2019/2020 from 2017 as well as Ensco Plc and Transocean.

It said it did not need to make provisions for these contracts currently, but was monitoring the situation.

Revenues at its property division rose 66 percent to S$503 million due to higher sales of residential projects in China and Singapore. It sold about 940 homes in the first quarter, a 31 percent increase.

China’s housing market bottomed out in the second half of 2015 on a series of government support measures, but a strong rebound in prices in the biggest cities has sparked concerns that some markets may be overheating, driving Shanghai and Shenzhen’s authorities to tighten home purchase requirements.

The company said it continued to see positive demand for its developments in Shanghai, Chengdu, Tianjin and Wuxi.

The company’s shares closed 2 percent down on Monday ahead of the results, while the broader market ended 0.2 percent lower. ($1 = 1.3547 Singapore dollars) (Reporting By Aradhana Aravindan, additional reporting by Gaurav Dogra in Bangalore; Editing by Keith Weir)

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