Keppel Q1 earnings climb despite revenue drop

GAINS from selling some equity investments lifted first-quarter earnings for conglomerate Keppel Corp despite a drop in revenue.

Net profit for the three months to March 31 expanded 6.4 per cent to S$360.2 million from the previous year, the group said in a Singapore Exchange filing after markets closed on Thursday.

Revenue slid 6.1 per cent to S$2.81 billion in the same period, which Keppel said was mostly due to lower contributions from its infrastructure arm.

The bulk of KepCorp's earnings come from its offshore and marine division. The group said that the operating margin for its offshore and marine arm had slipped to 12 per cent in Q1 from 14.2 per cent the previous year.

KepCorp chief executive Loh Chin Hua said in a webcast on Thursday that the offshore industry "has been sliding deeper into the doldrums" amid an ongoing slump in crude oil prices. "Across the board, not a single drilling rig order has been placed since the start of this year, and rig inquiries have also not been converted into any new contracts."

KepCorp will "focus on partnering our customers to develop better and more innovation offshore solutions for areas beyond drilling, where demand is expected to remain resilient", Mr Loh said.

The group said in a statement that its offshore and marine unit secured new orders worth about S$500 million in total in Q1, and is already building "niche, non-drilling" vessels such as accommodation semis and liftboats.

Mr Loh also said that Sete Brasil is unlikely to cancel its projects with KepCorp, adding that KepCorp will "explore all our options including the possibility of slowing down construction until Sete Brasil has sewn up long-term financing for our projects".

KepCorp shares fell one Singapore cent to S$9.44 on Thursday before results were released.