Keppel sharpens focus on four key areas with 10-year road map

Keppel Corporation has unveiled a 10-year road map that sharpens its focus on four key segments with an eye on mergers and acquisitions and divestments of selected assets.

Its Vision 2030 plan - a year in the making - redefines the firm's various businesses into four areas - energy and environment; urban development; connectivity; and asset management.

Keppel, one of the world's largest oil-rig makers, also wants to pivot from lumpy project-based earnings towards recurring income in hopes of earning a market re-rating.

It also aims to crank up its efforts to meet a 15 per cent return-on-equity target.

Chief executive Loh Chin Hua said: "This plan is a big step up (from Vision 2020 adopted in 2014). The Keppel of 2014 is very different from the Keppel of 2020. Much water has gone under bridge. My colleagues are bolder now.

"We started out as a conglomerate with disparate businesses unified by name and a common heritage; we are becoming one that is clearly an integrated business."

Keppel's individual business units will tap the synergies across the group that may not have been available to them earlier, such as floating data centre parks and large-scale urban developments.

It will zero in on renewables, environmental solutions, near-shore floating infrastructure and connectivity solutions, including green data centres and smart-district development. In short, it wants to become a "powerhouse of solutions for sustainable urbanisation".

It will also activate its sizeable land banks in China and Vietnam to recycle capital and improve returns.

Sustainability will remain a centrepiece of the company's strategy, said Mr Loh at an analyst briefing on Thursday to announce Vision 2030. Keppel Capital, the group's asset-management arm, will be an "important twin" to help fund the solutions created by the group, he added.

Keppel's blueprint is being launched amid Temasek's pre-conditional partial offer to gain control of the firm, a $4 billion deal that still appears to be on track.

Temasek then plans to undertake a comprehensive review of Keppel's businesses alongside its board.

Mr Loh said: "We have to plan for the long term and have a vision that can serve as a rallying point for Keppelites... particularly at this point of time, when there is a lot of uncertainty.

"It's not all about profits, but also about how we can be a part of creating greener urban spaces. This vision transcends Covid-19 and any short-term events for the group. We believe it will resonate with all parties."

Keppel's multi-year plan to lead its transformation over the long term follows a six-year plan laid out in 2014 - the year Mr Loh took over as Keppel's chief.

The plan is being launched against the backdrop of an oil price slump and the pandemic.

"Our belief is that Covid-19 will not change some of the trends that have already started. If anything, many trends such as digitalisation and climate change will accelerate," he said.

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