Keppel CEO confident of resilience, growth

SINGAPORE - More challenges in the offshore and marine industry will await Keppel Corp in 2017, but the conglomerate can count on its diverse business lines for resilience and growth.

This was the new-year message sent out on Tuesday (Jan 3) by chief executive Loh Chin Hua, who urged his colleagues to "waste not a good crisis" to build a stronger company for the future.

Keppel's performance has been closely watched as the oil price woes decimated Singapore's rig-makers and offshore marine service firms. The corruption scandal surrounding its Brazilian business did not help matters.

In the nine months ended Sep 30 last year, Keppel's net profit was down 43 per cent year-on-year to S$641 million, as the offshore and marine earnings plunged 69 per cent to S$167 million.

"Despite the recent spike in oil price following Opec's decision to reduce supply. We expect the winter in the offshore market to continue for some time," Mr Loh said on Tuesday. While Keppel's offshore and marine unit "soldiers on" to wait for the upturn, the group is primed for the growth opportunities tabled by Asia's rapid urbanisation, he stressed.

"The Keppel Group is well placed to provide solutions to meet the growing demand for energy, water, clean environments, good urban living and connectivity."

Keppel's property arm Keppel Land has recorded strong residential sales in China and Vietnam. Activities in these two markets, along with Myanmar and Indonesia, have been ramped up; divestments, such as September's sale of stakes in Lifehub@Jinqiao in Shanghai, have also beefed up returns.

The property business was the group's best performer in the first nine months last year, with net profit rising 20 per cent year-on-year to S$351 million.

In the infrastructure sector, Keppel's strong position was highlighted by last month's announcement that it will build, own and operate Singapore's fourth desalination plant. The plant will be operational in 2020.

"In 2016, the group's data centre business increased its footprint by more than 45 per cent in terms of net lettable area, by entering or expanding in markets such as Hong Kong, Italy, the United Kingdom and Germany."

"Keeping pace with the increasing importance of e-commerce, Keppel Logistics acquired a stake in a Singapore-based e-commerce fulfilment company, Courex, to build complementary capabilities in this growing and highly competitive business," Mr Loh added, referring to a deal announced in October.

Creating synergy between its individual business units will also be one of Keppel's key priorities, following the collaboration between Keppel Capital and Keppel Telecommunications & Transportation last year to set up private equity funds targeting data centre investments. "We will continue to look for ways to deepen collaboration and hunt more effectively as a pack."