Keppel Offshore & Marine (Keppel O&M) announced 3,080 job cuts in its third quarter results as a consequence of “very challenging” market conditions and a reduction in workload.
According to the rig builder, these measures were undertaken to keep the company profitable despite a sharp drop in revenues and operating profits.
“In this quarter, Keppel O&M continued to rightsize, further reducing its direct workforce by about 3,080. This includes a reduction of around 660 in Singapore and 2,420 in our overseas yards,” Keppel Offshore & Marine CEO, Loh Chin Hua, said.
Keppel Offshore & Marine Cuts Over 3,000 Jobs
As well as this, senior management across all Keppel business units have voluntarily taken a reduction in their monthly salary.
Still, for the first nine months of 2016, the company had to reduce its direct workforce by nearly 8,000, or approximately 26%, the CEO explained.
Keppel owns 20 yards and offices worldwide
This follows a 43% downfall in the group’s net profit year-on-year, mainly a result of lower profit contributions from the O&M division.
“Much of the reduction has so far been through natural attrition. However, we will increasingly also look into early termination of contracts and selective retrenchment in Singapore, in line with the drop in workload,” the CEO explained further.
“Where possible, we will look to redeploy displaced talents to other business units within the Group,” he added.
Market Outlook Remains Grey, But Keppel is Positive
According to the executive, the landscape for the sector remains “very challenging”, despite OPEC’s recently announced deal to cut production.
Although oil prices seem to be gradually recovering, he envisages demand in the offshore market to remain “tepid” and oversupply to remain a key concern.
In the meantime, he expects oil majors to continue prioritising their balance sheets and hold back on offshore exploration expenditures.
However, he maintains a positive outlook on the market in the longer term.
“The harsh winter in the O&M market will not last forever. We are not just cutting jobs to survive the short-term. We are taking advantage of the downturn to restructure Keppel O&M and make the company leaner, more competitive and stronger when Spring returns,” he stated further.