Robust returns from its property unit turbo-charged earnings at Keppel Corporation in the first quarter.
Net profit jumped 33.7 per cent to $337.5 million for the three months to March 31, it reported yesterday.
Revenue was buoyant as well, up 17.8 per cent to $1.47 billion, thanks to stronger turnover from property and infrastructure that offset lower work volumes in the offshore and marine (O&M) division.
Chief executive Loh Chin Hua noted that the group's multi-business strategy has enabled it to deliver "creditable results amid the volatile environment". Though there is increased confidence in the O&M unit amid rising oil prices, "it may take some time before we see sustained recovery across the board", he said in a webcast.
"The jack-up market continues to be plagued by a supply overhang, with both utilisation and day rates remaining soft."
Keppel Corp plans to activate some of its Singapore landbank to ride the positive sentiment in the property market. This includes launching homes later this year on a Serangoon site it acquired jointly with Wing Tai Holdings.
AT A GLANCE
REVENUE: $1.47 billion (+17.8%)
NET PROFIT: $337.5 million (+33.7%)
"With a landbank of about 1,700 units in Singapore, including around 500 units from the redevelopment of Keppel Towers and Nassim Woods, we are not in a hurry to acquire land," Mr Loh said.
The group may redevelop Nassim Woods at the year end and Keppel Towers early next year, pending market conditions.
The largest profit contribution in the first quarter came from property, which posted a 298 per cent surge in earnings to $378 million on the back of a stake divestment in Keppel China Marina Holdings. This yielded a gain of $289 million.
There were also higher contributions from property trading in Singapore and China.
Keppel's infrastructure division posted a net profit of $26 million in the quarter, 19 per cent lower year-on-year, due mainly to a gain from the divestment of interests in GE Keppel Energy Services in the same quarter last year.
The investment and O&M divisions posed a drag on profit.
The investment unit swung into a net loss of $44 million from a net profit of $125 million a year ago in the absence of profit from land sales at the Sino-Singapore Tianjin Eco-City, which is lumpy in nature, and fair value losses on the KrisEnergy warrants held.
O&M incurred a net loss of $23 million although it has managed to secure new contracts worth about $580 million this year, or close to half of the $1.2 billion secured for the whole of last year.
Earnings per share came in at 18.6 cents, up from 13.9 cents a year earlier, while net asset value per share was $6.39, up from $6.29 as of Dec 31.