The chief executive officer of KEPPEL Corp, Choo Chiau Beng, made it clear that his quick mission in his first yearly report as CEO is to push the company out of the financial downturn in a fighting-fit position.
“My top priority is to make Keppel fighting-fit by becoming leaner and stronger”, Mr. Choo said. “To achieve this, we are reviewing all our businesses to see how we can create further value out of them. We will rationalise and restructure, and even shed some operations where we are unlikely to extract much more value.”
Mr. Choo admitted that similar to other businesses, many of their company’s business properties have been affected by the global economic crisis. Slowdown in infrastructure projects coming on-stream, the resulting drop in rig orders and volatility in crude oil prices, and delayed launches of residential property projects have caused a big impact to the company.
However, Mr. Choo stated, “Over the longer term, we remain confident of the fundamentals of the industries we are in.”
“We believe there continues to be growth potential in our key businesses, as they meet global needs which are real, concrete and enduring”.
Still, the company is taking the future with lots of concern. It will continue going after cash flow positive projects and contracts and infrastructure projects that afford stable returning profit. “Capital expenditure requirements and new investments will be evaluated selectively and carefully. We will invest only if the returns are meaningful”, Mr. Choo said.
He mentioned that with the offloading and storage conversions, ongoing floating production and 14 rig deliveries scheduled, the Keppel’s yards will be much busier this year than the previous year. However, Mr. Choo said that they will just continue to manage costs carefully and tightly to take projects on with “good down payments and timely progress payments”. The company’s marine and offshore sector will also utilise the slowdown to enhance its suite of proprietary technological and designs solutions and to beef up its research in newer competencies and technologies.
According to Mr. Choo, the company is still looking out for other opportunities. In fact, the infrastructure sector will exploit synergies to optimise value and to grow the business, while the property sector is keeping an eye out for exclusive acquisitions once good chances show themselves.
He also emphasised that in spite the bad move in oil prices, SPC stays as a fundamental element of the Keppel Corp.
“We support its strategy to diversify its earnings base by further growing its portfolio of upstream assets”, Mr Choo said. He noted that their upstream business, which SPC has one exploration permit and nine production-sharing contracts all over Asia-pacific region, has added approximately 40 percent of the Keppel’s after-tax income.
“The downturn presents opportunities and SPC will continue to invest prudently to benefit from an eventual recovery of the global economy”, said Mr Choo.
He resolved: “For us, prudent financial management is important in growing our business in good times and sustaining them in bad times”.