Keppel H1 net profit falls 59% to S$154.7 million on rig impairments, M1 deal fallout; shares close 4.3% lower
Group revenue rises 24.6% to S$3.8 billion; company points to 25% growth in core ‘New Keppel’ operations
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[SINGAPORE] Asset manager and operator Keppel on Thursday (Jul 30) reported a 59 per cent drop in overall net profit to S$154.7 million for the first half ended Jun 30, down from S$377.7 million a year earlier.
The group’s results were dragged down by a S$375 million net loss in its non-core portfolio that is slated for divestment. This included S$165 million in impairments on 13 legacy rig assets, in addition to interest costs tied to these rigs.
Depreciation and amortisation adjustments following the termination of M1 telco’s sale to Simba in May also contributed to a net loss of S$65 million. There was also a S$32 million net loss from property-related non-core assets, mainly from operating losses on investment properties and fair value loss on investments.
Shares of Keppel fell by 4.3 per cent or S$0.52 to close at S$11.48 on Thursday. The counter had risen 2.9 per cent or S$0.34 to S$12 the previous day.
Looking past its non-core drag, Keppel highlighted that its continuing core business – which it labels “New Keppel” – posted a 25 per cent rise in net profit to about S$530 million, from about S$424 million in the first half of the previous year.
Group revenue surged 24.6 per cent on the year to S$3.8 billion, lifted by higher contributions from Keppel’s own investments in listed entities and private funds, as well as its co-investments alongside them – termed as sponsor stakes and co-investments (SSCI).
SSCI contributed S$175 million to earnings, compared with S$18 million in H1 2025, while recurring income grew 13 per cent to S$467 million over the same period.
This is the first time Keppel is disclosing its SSCI contributions. Chief executive officer Loh Chin Hua said during an earnings briefing on Thursday that it will do so for subsequent earnings as this new reporting approach mirrors its business model and provides greater clarity on the performance of its core business.
At a segmental level, revenue was also boosted by its infrastructure and connectivity businesses.
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Net profit for the infrastructure business came in at S$538 million, a 55 per cent jump from a year ago, as a result of higher generation and retail sales after the Keppel Sakra Cogen plant began operations May this year.
Loh said that one month of earnings from the plant helped to offset softer spark spreads and cost impact from the Middle East conflict in the first half of the year, contributing towards the 9 per cent on-year earnings before interest, taxes, depreciation and amortisation growth for the power business.
Net profit for the connectivity segment increased about 54 per cent to S$77.5 million, supported by customer commitments secured for the Bifrost Cable System fibre pairs and higher contributions from Keppel DC Reit.
Both business segments offset weaker results from the real estate segment, which posted a S$18.9 million net loss, reversing the year-ago S$97.6 million net profit. The drop in profit was largely attributed to a loss from a dividend in-specie of Keppel Reit units. Excluding this anomaly, the segment would have been profitable at S$32 million.
The group’s sharp bottom-line drop translated to an earnings per share of S$0.085, down 59.1 per cent from S$0.208 in H1 2025.
Keppel declared an interim cash dividend of S$0.15 per share for H1 2026, unchanged from the year-ago period. It is also continuing its S$500 million share buyback programme, having repurchased 34.2 million shares for a total of S$356 million since July 2025.
Asset monetisation
As part of its asset-light strategy, Keppel said, it carried out about S$1.7 billion of asset monetisation year to date in 2026, and is on track to reach its full-year target of S$2 billion to S$3 billion.
This includes a recently announced plan to monetise up to 10 legacy offshore rigs for about S$3.7 billion. However, only six of them are slated to be divested by this year for a total of S$1.2 billion.
The company’s non-core portfolio currently has a gross asset value of S$13.7 billion, which it aims to substantially monetise by 2030. It completed the monetisation of about S$560 million of its non-core assets for this reporting period, and between 10 and 15 per cent of this sum will be used to fund special dividends for the year.
Loh also said that Keppel has reached an “inflexion point” in its transition towards an asset manager and operator with funds under management (FUM) hitting S$106 billion at the end of July, surpassing its S$100 billion target by the end of the year.
The group is aiming to scale its FUM to S$200 billion by 2030. Asset management fee revenue reached S$200 million for the first half of the year, while the platform completed S$3.1 billion in acquisitions and S$2.4 billion in divestments across its private funds and listed vehicles.
M1 sale
Following the failure of selling M1 to Simba in May, Loh said that it is focusing on improving the telco’s performance to maximise its value, as it continues exploring opportunities for broader telco industry consolidation.
Telco operators in the region that have undergone consolidation have typically seen a 10 to 15 per cent average revenue per user uplift, leading to more sustainable markets, he added.
For now, Keppel has established a three-year plan that is expected to deliver annual run-rate cost savings of S$70 million by 2028. Thus far, it has achieved about a rate of S$4 million, with an aim to reach S$10 million by the end of this year.
This cost structuring plan is similar to what Keppel did with its offshore and marine business before it spun it off, with Sembcorp Marine, to become Seatrium, said Loh.
However, this does not mean that Keppel will not look at opportunities to sell M1 until after the three-year plan has been implemented.
“We have a plan, but it doesn’t mean that we have to wait until the execution of the plan. I think you can start to see the tangible benefits of that, and that can factor into any potential discussion,” he said during the earnings briefing.
Loh added that the termination of the deal was not because regulators had issues with industry consolidation. He does not see getting the necessary regulatory approvals as an obstacle to any future sale of M1.
“If we enter into a transaction, we would want to make sure that it will likely go through. Because we thought that the first one will go through. So the second time round... we have to make sure that it will go through,” he noted.
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