The one-off financial penalty and related costs arising from the global resolution of Keppel Offshore & Marine's (Keppel O&M) corruption scandal in Brazil has pushed the larger Keppel group into its first quarterly loss since 2013.
Keppel Corporation sank into the red with a net loss of $495.8 million for the three months to Dec 31 last year, reversing significantly from a net profit of $143.1 million in the same period a year earlier.
The plunge was largely the result of a hefty $619 million charge relating to Keppel O&M's cross-border settlement with the authorities in the United States, Brazil and Singapore over corrupt payments made by a former agent in Brazil.
This sum included Keppel O&M's US$422.2 million (S$552 million) in fines, together with related legal, accounting and forensics costs.
Excluding the one-off charge, net profit would have come in at $124 million, 13 per cent lower than previously.
Keppel said in its announcement yesterday that the weaker quarterly showing was also due to poorer operating results from its offshore and marine division, although partially offset by higher profits from Singapore property trading as well as fair value gains from assets.
Revenue dropped 20.4 per cent to $1.54 billion, as turnover fell across all divisions except infrastructure.
AT A GLANCE
REVENUE: $5.96 billion (-12%)
NET PROFIT: $217 million (-72%)
DIVIDENDS PER SHARE: 22 cents (+10%)
The group registered losses per share of 27.3 cents for the quarter, compared with earnings per share of 7.9 cents previously. Net asset value per share stood at $6.29 as at Dec 31, 2017, down from $6.42 as at the same time the year before.
For the full year ended Dec 31, net profit tumbled 72.4 per cent to $216.7 million, while revenue fell 11.9 per cent to $5.96 billion.
Excluding the one-off items, net profit would have climbed 7 per cent to $836 million, underpinned by earnings growth in the property, infrastructure and investment divisions.
The property business accounted for the lion's share of Keppel's earnings with a net profit of $685 million, up from $620 million a year ago.
In contrast, Keppel O&M incurred a loss of $835 million compared with a net profit of $29 million previously, in the light of the financial penalty and related costs, as well as an additional provision of $81 million for losses made on the Sete Brasil projects and $54 million in impairment on other assets.
Keppel has proposed a final cash dividend of 14 cents for the fiscal year 2017, 16.7 per cent higher than the 12 cents declared for 2016.
This disregards Keppel O&M's one-off financial penalty and related costs, which the group has said it will ring-fence when considering dividend payouts. As a result, Keppel's total distribution for 2017 is 22 cents per share, 10 per cent up on the 20 cents per share in 2016.
Keppel chief executive Loh Chin Hua told a results briefing that the global resolution reached by Keppel O&M over past misdeeds in Brazil "brings an end to what has been a painful chapter for Keppel - one that we have recognised and dealt firmly with".
He said the board and management had thoroughly investigated the allegations and dealt with the issues uncovered, as well as put in place enhanced compliance controls - including comprehensive training and certification - to prevent any repeat of such misdeeds.
Keppel shares closed five cents lower at $8.58 yesterday, before the results were announced.