A stronger performance across the infrastructure and investments divisions helped boost earnings at Keppel Corporation during the first quarter, even as the offshore and marine business remained weak.
The conglomerate posted a net profit of $260.4 million for the three months to March 31, up 23.7 per cent on the $210.6 million from the same quarter a year earlier.
This marks a reversal from the last seven quarters of decline.
Earnings at the infrastructure division soared 129 per cent to $32 million, while the investment division saw a net profit of $125 million, well up from a net loss of $4 million previously. The property division eased 3 per cent to $103 million.
The solid showing from the investments division - the largest contributor to overall net profit with a 48 per cent share - was due mainly to share of profit from Sino-Singapore Tianjin Eco-City, the write-back of provisions for impairment of investments, recognition of fair value gains on KrisEnergy warrants and profit on the sale of investments, although this was partly offset by the share of losses in KrisEnergy.
On the other hand, the offshore marine division managed to break even compared with a net profit of $95 million previously. Operating profit came in at just $4 million due to lower volume of work.
AT A GLANCE
NET PROFIT: $260.4 million (+23.7%)
REVENUE: $ 1.25 billion (-28.4%)
Chief executive Loh Chin Hua told a Web-briefing that while the unit continued to make a profit at the gross operating level, it was insufficient to cover its fixed costs. It was contributions from associates that helped the division break even.
"This shows the importance of the right-sizing efforts that Keppel Offshore & Marine (Keppel O&M) has embarked on since early 2015."
Mr Loh noted that Keppel O&M further reduced its global direct workforce by about 1,250 or 6 per cent during the quarter. "Following the latest reductions, the headcount in Keppel O&M is approaching a steady state that is appropriate for the level of work in our yards,
"We will explore ways to achieve further cost savings and ensure that Keppel O&M remains profitable despite the reduced topline."
Group revenue slid 28.4 per cent to $1.25 billion, dragged down by the offshore and marine business, where turnover fell 41 per cent to $483 million. Turnover for the property business dropped 48 per cent to $262 million, due mainly to lower revenue from China and Singapore. Revenue from the infrastructure division grew 20 per cent to $467 million as a result of increased sales in the power and gas business.
Earnings per share came in at 14.3 cents, up 24 per cent on the 11.6 cents previously, while net asset value per share stood at $6.48 as at March 31, 0.9 per cent higher than the $6.42 as at Dec 31 last year.
"Notwithstanding the headwinds, the Keppel group has remained resilient, underpinned by our multi-business strategy, with different engines kicking in to steady the group," said Mr Loh.
Keppel shares yesterday closed down nine cents or 1.4 per cent at $6.55, before the results were released.