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Keppel Corp posts 30% fall in Q3 net profit to S$159m

KEPPEL Corp's third-quarter net profit fell 30 per cent to S$159 million from a restated S$227 million a year ago, led by the absence of gains from divestment of a commercial development in Beijing and higher net interest expense.

These were partly offset by higher contributions from associated companies as well as property trading projects in China and Singapore, said Keppel in its results announcement on Thursday.

Revenue jumped 60 per cent to S$2.07 billion from S$1.30 billion with higher recognition from offshore & marine due property and infrastructure projects, as well as increased sales in the power and gas business and from the consolidation of M1's results.

Revenue from the offshore & marine (O&M) business rose by S$216 million to S$632 million due mainly to higher revenue recognition from ongoing projects. New contracts secured by this division year-to-date stood at S$1.9 billion, with close to 60 per cent of the new orders for LNG and renewables-related projects.

Keppel Corp CEO Loh Chin Hua said the recent settlement agreement reached by Keppel O&M with Sete Brasil "brings closure" to the outstanding contracts for the construction of the six rigs.

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Revenue from the property division increased by S$205 million to S$385 million due mainly to higher revenue from property trading projects in China, Vietnam and Singapore.

Revenue from the infrastructure business grew by S$68 million to S$742 million as a result of increased sales in the power and gas business and progressive revenue recognition from the Hong Kong Integrated Waste Management Facility project while revenue from investments rose by S$283 million to S$308 million due mainly to the consolidation of M1.

Mr Loh pointed out that the group's data centre business has become an important growth area.

"The injection of Keppel DC Singapore 4 into Keppel DC Reit reflects Keppel's business model and our ability to create value for different stakeholders by hunting as a pack. Over the past five years (2014-2018), the Keppel Group achieved earnings of about S$430 million from the data centre business, not including the approximately S$270 million premium over the carrying value of Keppel's stake in Keppel DC Reit," he said.

Earnings per share for the three months to September fell to 8.8 Singapore cents from 12.5 cents. No dividend was recommended for the period, same as the previous corresponding period.

For the nine-month period, net profit fell 37 per cent to S$515 million on the back of a 26 per cent rise in revenue to S$5.4 billion.

Net profit fell due to lower gains from en bloc sales and divestments. In the previous nine-month period for FY2018, Keppel benefited from the en bloc sales of development projects in China and Vietnam, as well as gains from the divestment of a commercial development in Beijing which amounted to S$544 million, the company said.

Keppel Corp shares fell two Singapore cents or 0.3 per cent to close at S$5.96 on Thursday.

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