Keppel Corp Q4 net profit up on better showing from most divisions

Singapore

MAINBOARD-LISTED conglomerate Keppel Corporation reported 41.5 per cent higher net earnings at S$191.4 million for the fourth quarter ended December, bolstered by stronger performance from offshore and marine (O&M), property and investments divisions.

The higher bottom line was a result of narrower losses at O&M business, marginally better showing by the property division and returning to profitability at the investments segment in the period.

Correspondingly, Keppel Corp's earnings per share rose to 10.5 Singapore cents from 7.5 cents for the year-ago period.

In its results statement to Singapore Exchange on Thursday, Keppel Corp reported a 31.1 per cent increase year-on-year in turnover at S$2.2 billion for the quarter, with all except the property division showing higher revenue.

Specifically, there was higher recognition of ongoing projects from O&M and infrastructure divisions, the consolidation of telecommunications subsidiary M1 and higher asset management revenue.

Keppel Corp has proposed a final dividend of 12 cents per share, which will be paid on May 14 if approved by shareholders. The preceding year's final dividend was 15 cents per share.

For fiscal 2019, revenue was 27.1 per cent higher at S$7.58 billion.

But earnings fell 25.5 per cent to S$707 million from S$948.4 million a year ago, when it benefited from S$584 million gains through en bloc sales of development projects and property divestments.

Notably though, its O&M segment stopped bleeding red ink for the first time since 2016. O&M generated a net profit of S$10m for the full year, reversing a loss of S$109 million a year ago.

Loh Chin Hua, chief executive of Keppel Corp, said at a results briefing: "Our diversification and cost management strategies have returned Keppel O&M to profitability for the first time since FY 2016."

While he noted that the utilisation and day rates for jackups continue to improve as the industry is recovering, he said it would take some time for these to translate into new orders, given the oversupply in the market.

Over S$2 billion of new orders, or 18 per cent higher year-on-year, were bagged by the O&M division last year, with the net orderbook standing at S$4.4 billion as at the end of last year.

To manage the increased workload, Keppel O&M last year hired 2,800 additional direct employees - more than it had initially anticipated. It expects to increase its headcount by another 1,500 this year.

Though property net earnings were down by 45 per cent to S$517 million for the full year, the division was the top contributor to the group's bottom line. The weaker showing was mainly due to lower gains from en-bloc sales of development projects and the absence of divestment gains.

Net asset value per share stood at S$6.17 as at end of last year, marginally lower than the S$6.22 a year ago.

When asked whether it has been affected by the China coronavirus outbreak or Hong Kong civil unrest, Mr Loh replied that there has not been any direct impact, but said the O&M's engineering office has about 170 personnel in Wuhan - the epicentre of the outbreak.

2020 is an important milestone for Keppel Corp, Mr Loh said, as the group adopted a Vision 2020 six years ago to guide its long-term strategy and transformation. "As we progress beyond 2020, we see Keppel growing as one integrated business providing solutions for sustainable urbanisation."

The counter closed five Singapore cents or 0.74 per cent lower at S$6.74 on Thursday, before the financial results were released.