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Keppel Corp's Q1 net profit jumps 34%, buoyed by property division

KEPPEL Corporation reported a 33.7 per cent jump in net profit for the first quarter ended March 31 to S$337.5 million, underpinned by stronger contributions from its property division.

Revenue for the group improved by 17.8 per cent to S$1.47 billion, underpinned by higher revenues from property and infrastructure divisions that mitigated the impact of lower work volume in the offshore and marine (O&M) division.

"The Keppel Group remains resilient, underpinned by our multi-business strategy, which has enabled us to deliver creditable results amid the volatile environment," said Keppel Corp CEO Loh Chin Hua.

"Charting our growth as a provider of solutions for sustainable urbanisation, we will advance our pursuit of new markets and top lines with a focus on building stable, recurring income to complement our project-based and trading income."

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Making the largest profit contribution during the quarter was the property division, which marked a 298 per cent surge in net profit to S$378 million.

This was largely due to the divestment of Keppel Land China's stake in Keppel China Marina Holdings, yielding a gain of S$289 million, as well as higher contributions from Singapore and China property trading.

"The development and divestment of Keppel Cove in Zhongshan reflect Keppel's ability to develop premium properties and recycle assets for higher returns," Mr Loh said.

"We will continue to focus on our five key cities of Shanghai, Beijing, Tianjin, Chengdu and Wuxi, where we have established strong track records and local teams."

In the first quarter, two divisions posted net losses. The investment division posted a net loss of S$44 million, as compared to a net profit of S$125 million a year ago, in the absence of profit from land sales in the Sino-Singapore Tianjin Eco-City coupled with fair-value loss on the KrisEnergy warrants held.

The O&M division incurred a net loss of S$23 million for Q1 2018, after breaking even in the year-ago period, due mainly to share of associated companies' losses in the current period. Through enhanced efficiency, the O&M division marked an operating profit of S$8 million for Q1 2018 - an improvement from the S$4 million recorded in Q1 2017.

Still, the O&M division managed to secure new contracts worth about S$580 million year-to-date, or close to half of the S$1.2 billion secured for the whole of 2017. Its net order book as at end-March stood at S$4.3 billion, compared to S$3.9 billion at the end of 2017.