Plummeting profits to hound Singapore shipyards until 2021

Newbuild rig order numbers remain close to nil.

It’s going to be a long, harsh winter for Singapore shipyards, as a sustained period of low orders is a reality looming on the horizon.

According to a report by UOB Kay Hian, coupled with the expectation of near zero newbuild rig orders until 2020 and a dismal floating production services (FPS) market, the yards will suffer through lacklustre profits for at least the next five years.

Moreover, balance sheets will be stressed and the yards will scrape by through sheer skill and managing overheads. UOB Kay Hian noted that all this will of course change if oil prices spike significantly above US$60/bbl.

The report championed Keppel over Sembcorp Marine (SMM) to investors that still want to brave the space—Keppel can be propped up by its property, infrastructure, and investment businesses.

On the other hand, SMM’s earnings are wavering as it has no other business to diversify to, and risks its rig-building and conversion orderbook thinning.

“While gearing remains elevated for both yards, the influx of cash as they deliver on projects should bring it to bearable levels. It is difficult to conclude if those levels are comfortable gearing levels for the long winter,” asserted the report.  

Follow the link for more news on

Join Singapore Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!