Keppel Corp posts 9% rise in Q1 revenue to S$2.3 billion
KEPPEL Corporation posted a 9 per cent rise in its revenue to S$2.3 billion for its first quarter ended Mar 31, 2023, from S$2.1 billion the same period the year before.
While the company did not specify its net profit for the quarter, it noted that the figure was significantly higher year on year, due to the disposal gain of around S$3.3 billion from the merger between its offshore and marine (O&M) unit and Sembcorp Marine (Sembmarine).
Excluding discontinued operations and the disposal gain, net profit for the quarter was slightly higher on year, driven by a stronger performance from its energy and environment, urban development, and connectivity segments, Keppel said on Thursday (Apr 20).
The company noted that it has replaced volatile earnings from its O&M unit with about S$170 million in stable annual interest income, from vendor notes received from its Asset Co transaction.
Under the merger, Keppel Corp had transferred certain Keppel O&M assets – including the legacy rigs and associated receivables – to Asset Co, which is the entity majority-owned by external investors after the move.
After the merger, Keppel recognised a disposal gain of S$3.3 billion, received S$500 million in cash, and distributed S$3.9 billion to Keppel shareholders via a distribution in specie of Sembmarine shares in the quarter.
Net gearing of the company rose slightly to 0.83 times as at end-March 2023, from 0.78 times as at end-2022.
Keppel chief executive Loh Chin Hua noted that the company has achieved its three-year asset monetisation target ahead of schedule, with over S$4.9 billion announced since October 2020.
He expects a new interim monetisation target to be unveiled in May, as the upper bound of the S$3 billion to S$5 billion range will likely be exceeded by year-end.
As for the company’s asset management segment, Keppel saw a 43.9 per cent decline in quarterly revenue year on year to S$41 million. This came due to an absence of fees from acquisitions made by Keppel Infrastructure Trust and Keppel DC Reit.
Still, Keppel Capital chief executive Christina Tan said that the company continues to see strong deal flows in infrastructure and data centres, which are essential services that still garner strong demand.
“For real estate, with higher interest rates, we do see some cap rate expansion as well in certain markets in Asia, so there will still be opportunities for us to acquire,” she said.
Tan added that there should be “a lot more activity” in the coming months in terms of investment pace.
Reiterating the company’s goal of growing its assets under management to S$200 billion by 2030 from S$50 billion currently, Loh said that the target is “very feasible” as Keppel’s focus is now on asset management.
Meanwhile, revenue generated from the company’s energy and environment segment grew 9.7 per cent to S$1.6 billion due to higher sales from the power and renewables as well as energy-as-a-service businesses.
Urban development segment revenue grew a further 16.7 per cent to S$244 million in Q1 on Keppel Land’s increased contributions from trading projects.
The company’s connectivity segment grew 8.3 per cent to S$326 million on higher contributions from M1, whose revenue rose 14 per cent to S$295 million. However, this was offset by year-on-year declines in Keppel Data Centres’ performance due to costs incurred to support new projects as well as expansion into new markets.
Shares of Keppel closed 1.3 per cent higher at S$6.27 on Thursday, before the results were released.
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