Keppel full-year underlying profit up 5% as data-centre business thrives

SINGAPORE - Keppel’s multi-year transformation into a global asset manager and operator has yielded strong results, chief executive officer Loh Chin Hua said as the group announced its full-year earnings.

Keppel reported a net profit of $1.06 billion from continuing operations for the year ended Dec 31, 2024, a 5 per cent increase over the $1.02 billion for 2023. This figure excludes the effects of its legacy offshore and marine (O&M) assets.

Its full-year performance translates into a return on equity of 10.1 per cent, compared with 2023’s 9.5 per cent, the group said in an exchange filing on Feb 5.

Its board proposed a final cash dividend of 19 cents per share for 2024, the same as the previous year. This will be paid to shareholders on May 9, pending approval at the company’s annual general meeting due to be held on April 21.

Including the interim dividend of 15 cents per share paid to shareholders in August 2024, it brings cash dividend for 2024 to 34 cents per share.

For its second half year, Keppel saw a 19.9 per cent rise in profit from continuing operations, including legacy O&M assets, to $527.9 million from $440.3 million a year ago.

Keppel said that all three of its business segments – infrastructure, real estate and connectivity – were profitable in 2024.

The connectivity segment – which operates its data-centre business – saw full-year profit jump nearly 45 per cent to $184 million, contributing to 17 per cent of group earnings.

The segment’s earnings have risen 2.5 times from 2018 to 2024, Keppel said. The total gross power capacity of the data-centre portfolio has also expanded from 240 megawatts in 2018 to 650 megawatts in 2024, with plans to reach 1.2 gigawatts in the next few years.

Keppel has also gone into subsea cable systems, with a Bifrost Cable System that it is developing being granted a subsea cable landing licence by the US in January, which paves the way for it to be deployed in the second half of 2025.

“When completed, Bifrost will not only deliver enhanced connectivity and network diversity to our customers but also generate attractive returns for Keppel and our private fund co-investors, with expected internal rate of return of over 30 per cent per annum,” Mr Loh said.

He added at the results briefing that Keppel is also pursuing opportunities for two more cable systems with over 30 fibre pairs connecting South-east Asia to the rest of Asia and beyond. 

Keppel said data centres are its hottest business right now as burgeoning demand for digitalisation and artificial intelligence (AI) provides more opportunities for the firm.

CEO of connectivity Manjot Singh Mann said the digitalisation trend is here to stay, even though it is too early to comment on the impact of recent events like the disruptive emergence of Chinese AI start-up DeepSeek and the US tightening its grip on AI chip flows.

“I think the reality is that as efficiencies grow and as costs drop, we expect the innovation landscape to increase significantly,” he said, adding that smaller firms will start looking at AI innovations.

“There’s more an opportunity than a threat, because this will help us provide digital infrastructure as the demand grows exponentially.”

Keppel, which is targeting $200 billion in funds under management (FUM) by 2030, said its FUM had reached $88 billion by end-2024.

Said Mr Loh: “2024 was a pivotal year for Keppel, as it marked the first year of our transformation from a diverse conglomerate into a global asset manager and operator, seizing opportunities amidst the energy transition, digitalisation, the artificial intelligence boom and demand for alternative real assets.”

Keppel had said in November 2024 that it was taking back control of 13 legacy rigs – which were planned to be transferred to holding company Asset Co and majority-owned by external investors, following the merger of subsidiary Keppel Offshore & Marine and Sembcorp Marine (now named Seatrium).

“Looking ahead, having taken over full control of Asset Co, we will focus on derisking our legacy O&M assets, which include Asset Co’s rigs and our stake in Floatel with a carrying value of approximately $3.6 billion as at end-2024,” Mr Loh said in his Feb 5 statement.

“Taking control of Asset Co, including the $1.1 billion cash in the now 100 per cent-owned subsidiary, enables us to better manage when and how the legacy rigs are monetised,” he added.

He noted that the firm has also shifted to providing technology solutions and operating and maintenance services that generate steady recurring income. 

It has expanded into China, India, Thailand and Vietnam, deploying AI and machine learning to offer decarbonisation and sustainability solutions at scale.

Keppel’s biggest earnings contributor is its infrastructure segment, which accounted for 63 per cent of group net profit. It saw a 4 per cent drop in full-year profit to $673 million, due to lower fair-value gains from sponsor stakes and lower distributions from unit Keppel Infrastructure Trust.

As at end-2024, the infrastructure segment had about $6 billion of long-term non-power related contracts, which are expected to generate over $100 million in annual earnings before interest, taxes, depreciation and amortisation from 2025.

As for Keppel’s real estate segment, Mr Loh said the group has pivoted from being a traditional developer into an asset-light real estate solutions provider, focused on recurring income.  

Keppel’s exposure to China property has also been derisked, reduced to about $1.1 billion at the end of 2024, held at historical costs on the books.

Keppel as a whole saw recurring income of $766 million, which made up 72 per cent of group full-year profit.

The company’s cash position has also improved with a free cash inflow of $901 million in 2024, compared with an outflow of $384 million the year before.

Shares of Keppel closed up five cents, or 0.75 per cent, to $6.68 on Feb 5.