Has the collapse of GLCs begun?

GLCs are managed by PAP-appointees who had no prior business experience before landing in the company’s top management with a parachute.

Their board of directors and senior management include a disproportionate number of former military generals/civil servants/MPs/ministers.

In the domestic market, GLCs run monopolies and could make unbelievably wide profit margins effortlessly.

But when it comes to international competition, our book-smart PAP-appointees have proven to be failures.  😉

For example, low-cost carrier Tiger Airways had to endure 4 years of losses amounting to hundreds of millions before it was taken over by SIA.
1temasek27
And 48-year old NOL had coincidentally racked up 4 years of losses amounting to more than $1 billion before being sold to CMA CGM.

Many foreign acquisitions have also gone under but remained undisclosed.

Former NOL CEO Ng Yat Chung was surprisingly frank and had admitted to his own incompetence: “NOL did not adapt fast enough. The world has changed … a bit slow and reluctant to change”.

Ng appears to be describing other GLCs as well because adapting to a fast-changing world would require GLCs to remove deadweight from their boards and senior management.

However, it’s still business as usual at GLCs.

And so dismal results continue to be produced, examples in the table below.
1temasek29Top of the list and potential failure is SIA.  Its revenue has in fact shrunk and FY2016 net income is lower than FY2012.  Lost market share is unlikely to return simply because of investments in new hardware.  SIA management continue to be top heavy, have not realized its service has deteriorated and live as if Singapore Girl did not age. 😦

Over the same period, Keppel Corp’s revenue has halved, with net income collapsing almost 90%.

A number of GLCs may soon be in dire financial straits, confirmation that all is not well.

CEOs of GLCs are not just “a bit slow and reluctant to change”: they bury their heads in the sand until it’s too late.

Without meaningful change, GLCs will continue to dig their graves.  Their collapse may have already begun. 😦

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5 Responses to Has the collapse of GLCs begun?

  1. Xaver Basora says:

    There’s news that a hedge fund ha invoked the anti mafia law RICO of the US AGAINST Keppel.
    The hedge fund is seeking 660 million in damages. At the very least Keppel will be liquidated to pay some part of the damages id found culpable. Then there’s another one banned by the World bank for a few years due to corruption.
    So yes the GLC model will collapse as it’ll be impossible to hide the massive losses

    • Phillip Ang says:

      Thanks. 🙂

      • Anonymous incognit4444 says:

        What worries me is when the Temask companies collapse what’ll happen to the country? There’s no alternative and no back up to pick up the pieces.

    • Phillip Ang says:

      Keppel appears to be preparing for this as they are selling off some assets. The rest of the potential fine could be paid from their annual profit. Including the S$619 million penalty plus costs, Keppel would have made S$836 million for FY2017. Unless another lawsuit surfaces, Keppel will survive.

      • Anonymous incognit4444 says:

        Don’t worry. The next ione will be against filing falsified financial statements. Both Keppel and the accounting firms will be slugging it out until the latter pull the plug and demand Keppel be liquidated to pay its share of the fine.
        And the what as other Temask cpmpanies face the same scrutiny for their financial statements

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