Shares in Keppel Corporation bucked the market trend on Friday (Jan 26) even after the conglomerate posted its first-ever quarterly loss on the back of S$619 million in graft fines and related costs.
Clearly investors have priced in the hefty fines that unit Keppel Offshore and Marine (KOM) agreed to pay over its Brazil graft payments.
But what of the group's offshore and marine (O&M) contract provisions?
In its fourth-quarter financial results announced last Thursday, Keppel Corp booked another S$81 million provision for losses made on its Sete Brasil rig-building projects. That is on top of a S$230 million provision it last extended to these projects in the fourth quarter of the 2015 financial year.
Almost six years after Sete Brasil awarded US$10 billion worth of contracts to KOM and Sembcorp Marine (SembMarine), the other Singapore O&M heavyweight, the delivery of these rigs is still contingent on the progress of Sete Brasil's ongoing financial restructuring.
So far, Keppel Corp has been reviewing its exposure to the Sete Brasil contracts on a quarterly basis because the situation with Sete Brasil, as chief executive Loh Chin Hua puts it, has been "fluid".
If that is indeed the case, why has it taken two years for Keppel Corp to disclose the widening of its Sete Brasil provision by another S$81 million?
Read the full original article at The Straits Times.