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In my last article, I received a comment to share insight about the possible merger of Keppel Corp (KC) and Sembcorp Marine (SCM) to ensure survival in the light of the current low oil price environment. In response, I wrote this article. To avoid confusion, Keppel Corp is the parent company of Keppel Offshore and Marine (KOM), so the merger on the cards is between KOM and SCM.

WHY A MERGER IS POSSIBLE

Declining earnings

Since the oil crisis began in late 2014, both KOM and SCM had been reporting profit slumps. During the heyday, KOM’s earnings attributed to >50% of group’s profits. Today it is a completely different story. While KOM’s revenue is still 25-30% of the Keppel group’s topline, earnings fell drastically. For FY2019, Keppel group earnings is $707m while KOM net profit is S$10m, attributing

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