Keppel's net profit down 20.9% to $160.5 million on absence of divestment gain

But Keppel's revenue was up 21.3 per cent to S$1.86 billion for the first quarter ended March.
But Keppel's revenue was up 21.3 per cent to S$1.86 billion for the first quarter ended March.PHOTO: REUTERS

SINGAPORE (THE BUSINESS TIMES) - The net profit of mainboard-listed Keppel Corp fell 20.9 per cent to $160.5 million for the first quarter ended March, mainly on the absence of the divestment of its 70 per cent stake in Vietnam's Dong Nai Waterfront City a year ago.

This translates to an earnings per share of 8.8 cents in Q1, compared to 11.2 cents a year ago.

But its revenue was up 21.3 per cent to $1.86 billion for the quarter, mainly a result of higher revenues from offshore and marine projects, property trading projects in Singapore, the power and gas business and the consolidation of telco M1.

The topline growth was partly dampened by lower contributions from property trading projects in China, environmental engineering projects and asset management.

Keppel's offshore and marine (O&M) segment posted a net profit of $3 million for the quarter, halved from a year ago. The division's operating profit stood at $28 million.

During the circuit breaker period, Keppel O&M's yards continue to provide services in vessel repair, maintenance and overhaul, but with reduced manpower and precautionary measures in place. Most of the company's overseas yards are also operational with varying levels of restrictions.

Keppel O&M remains resilient amid the oil price shock due to diversification, the company said. Renewables and gas-related solutions accounted for more than 70 per cent of the division's $4 billion net order book as of the end of March.

Meanwhile, the company's property division's net profit plunged 73 per cent to $35 million for Q1, due mainly to the absence of the Dong Nai gain as well as a tax writeback last year. In Q1, Keppel Land sold 450 homes, about 15 per cent more than a year ago. China contributed over 70 per cent of sales volume.

Its infrastructure division posted a net profit of $174 million for Q1 2020, more than 10 times that of the $16 million net profit the year before.


Given the work-from-home situation, Keppel Data Centres has received enquiries from customers on new data centre capacity; it is also exploring the development of a floating data centre park at the Loyang Offshore Supply Base in Singapore.

Keppel's investments division fell into the red in Q1, with a net loss of $52 million compared with a net profit of $49 million in Q1 last year. This was due to the absence of re-measurement gains from previously held interests in M1 and mark-to-market losses on some investments.

Net gearing crept up to 0.88 times as of end-March, compared to 0.85 times a year ago. But with lower working capital requirement, its free cash inflow was $37 million in Q1 2020, reversing the $534 million outflow a year ago.

Keppel chief executive Loh Chin Hua said: "While Keppel is not directly involved in the sectors most severely affected by Covid-19, our businesses have inevitably been affected by the fall in global economic activity, lockdowns in various countries, disruptions to the workforce and supply chains, as well as the sharp drop in oil prices."

Keppel has the necessary credit lines to operate, he said, adding: "Nevertheless, given the tightening liquidity environment, we are watching our cashflow and gearing carefully, and will manage costs across the group."