Keppel H2 net profit falls 40.6% to S$429.1 million

KEPPEL Corporation reported on Thursday (Feb 2) a 40.6 per cent year-on-year decline in net profit for the second half ended December on the back of lower revenue from continuing operations.

The group’s net profit for the six months ended Dec 31, 2022 fell to S$429.1 million from S$722.9 million in the corresponding period a year earlier. This translated to earnings per share of S$0.242 for the H2 FY22, down from S$0.397 in H2 FY21.

The net profit included discontinued operations, which comprise the results of Keppel Offshore & Marine (O&M), excluding certain out-of-scope assets, and other group adjustments.

Excluding discontinued operations, net profit from continuing operations would have fallen 55.2 per cent to S$404.8 million in H2 FY22, down from S$903.9 million in H2 FY21.

Revenue from continuing operations in the second half fell 12.3 per cent to S$3.3 billion, from S$3.7 billion in the year-ago period.

Keppel’s energy & environment segment recorded a net profit of S$126.6 million in H2 FY22, reversing the year-ago loss of S$53.5 million. But the other business segments posted weaker profits in H2 FY22.

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Net profit from urban development fell to S$114.1 million from S$483.6 million a year earlier, while asset management net profit dropped to S$155.9 million from S$184.2 million in H2 FY21.

Meanwhile, the corporate and others segment also posted a net loss of S$19.4 million in H2 FY22, compared to a S$252.9 million net profit in H2 FY21, largely due to lower fair-value gains recorded in H2 FY22 from investments in new technology and start-ups.

A final cash dividend of S$0.18 per share for FY22 was proposed. Including the interim dividend of S$0.15 per share paid to shareholders in August 2022, the total cash dividend for FY22 is S$0.33 per share, unchanged from FY21.

The proposed final dividend, if approved at the annual general meeting, will be paid out on May 10.

For the full year ended Dec 31, 2022, Keppel’s net profit slipped 9.4 per cent to S$926.6 million, mainly due to a decrease in urban development earnings, provisions for certain projects at Keppel O&M’s yard in the US, and lower fair-value gains from Keppel’s investment in Envision AESC.

The company said that these were partly offset by a S$293 million partial reversal of impairments made in 2020 for Keppel O&M’s legacy rig assets.

The asset management segment – which recorded a net profit of S$310.9 million – was the largest contributor to the group’s earnings, followed by urban development, energy & environment and connectivity.

Excluding discontinued operations, the group’s net profit for FY22 was S$839 million, down 32.7 per cent on year. Around two-thirds of this was derived from recurring income, which more than doubled year on year to S$560 million, Keppel said.

Revenue from continuing operations for the full year was flat at S$6.6 billion.

“Keppel continued to deliver a robust set of results amidst a difficult environment in 2022 whilst accelerating the execution of our Vision 2030 strategy,” chief executive Loh Chin Hua said in a statement.

He noted that the group – working together with its private funds and business trust – announced about S$2.8 billion of joint investments during the year.

“Through tapping third-party funds, we can scale up in our growth areas swiftly without raising our gearing significantly. 2023 will be an important year for Keppel, as we take the next leap forward in our Vision 2030 trajectory to be a global asset manager and operator, creating solutions for a sustainable future,” Loh said.

Keppel shares closed 0.1 per cent or S$0.01 higher at S$7.65 on Thursday, before the results announcement.