Singaporean conglomerate Keppel Corp swung to its first quarterly net loss in 14 years, after accounting for a huge fine its rig-building unit agreed to pay to resolve investigations into charges it bribed Brazilian officials.
Keppel, last month, said its offshore rig-building business had agreed to pay more than $422 million to resolve the bribery probe brought against it by authorities in the United States, Brazil and Singapore. Investigations with respect to the individuals involved are ongoing.
The company, whose businesses range from rig-building to property development, reported a net loss of S$495 million for the fourth quarter ended December, compared with a net profit of S$143 million in the year-ago period.
This marks the company’s first such loss since it started reporting quarterly numbers in 2003.
Excluding the one-off bribery fine and related costs of S$619 million, it would have reported a profit of S$124 million.
The company’s annual profit fell to S$217 million. Excluding the one-off charges, the annual profit would have been S$836 million. According to Thomson Reuters data, the average estimate from six analysts was S$709 million.
Keppel, which had promised to protect dividends from the fine, proposed a final dividend of 14 Singapore cents a share, versus its 2016 final dividend of 12 Singapore cents.
The property division, Keppel’s biggest income contributor, posted a profit of S$287 million, a rise of 7 percent.
Its offshore and marine (O&M) division posted a quarterly loss of S$836 million, versus a loss S$138 million a year ago.
The O&M business for both Keppel and its cross-town rival Sembcorp Marine has been hit by an oversupply of rigs and as their customers cut costs after oil prices started dropping mid-2014.
The rig market continues to be plagued by a supply overhang, and both utilisation and day rates remain low, Keppel CEO Loh Chin Hua said at its results briefing on Thursday.
However, some analysts say the market has bottomed out and crude prices are recovering.
Keppel can win new orders worth S$3 billion this year, DBS Equity Research estimated earlier this month.
Keppel’s O&M division had a net order book of S$3.9 billion at end-December, excluding orders from rig leaser Sete Brasil Participacoes SA, which filed for bankruptcy protection in 2016.
Keppel said it set S$81 million aside in 2017 as provision for losses on Sete Brasil projects.
Keppel shares, which have risen about 16.7 percent this year versus a 5 percent rise in the main index, closed down about half a percent ahead of the results announcement.
Rival Sembcorp Marine is scheduled to report its results next month.