Keppel : 1Q 2018 net profit up 34% year on year to S$337m

Keppel Corporation Limited (Keppel) reported a net profit of S$337 million for the first three months of 2018, 34% higher than the S$252 million net profit for 1Q 2017, bolstered by higher contributions from the Property Division.

The Group achieved revenue of S$1,470 million for 1Q 2018, which was an improvement of S$222 million or 18% over 1Q 2017. The increase was underpinned by higher revenues achieved by the Property and Infrastructure divisions, which mitigated the impact of lower work volume in the Offshore & Marine Division.

In 1Q 2018, the Group achieved an annualised return on equity of 11.4%. Net gearing was at 0.42x as at 31 March 2018, compared to 0.46x as at 31 December 2017. Free cash inflow was S$261 million in 1Q 2018 compared to an outflow of S$62 million in 1Q 2017.

Mr Loh Chin Hua, CEO of Keppel Corporation, said, 'The Keppel Group remains resilient, underpinned by our multi-business strategy, which has enabled us to deliver creditable results amidst the volatile environment.

'Charting our growth as a provider of solutions for sustainable urbanisation, we will advance our pursuit of new markets and top lines with a focus on building stable, recurring income to complement our project-based and trading income.'

The Property Division, which recorded a 298% year on year increase in net profit to S$378 million, was the largest contributor to the Group's 1Q 2018 net profit. The increase was due mainly to the gain on divestment of the stake in Keppel China Marina Holdings Pte Ltd, as well as higher contributions from Singapore and China property trading, partly offset by a lower share of associated companies' profits.

The Infrastructure Division's net profit of S$26 million for 1Q 2018, was 19% lower year on year, in the absence of a gain from the divestment of interests in GE Keppel Energy Services Pte Ltd in 1Q 2017, partly offset by higher contributions from the infrastructure services and environmental infrastructure businesses.

The Investments Division recorded a net loss of S$44 million for the first quarter, as compared to net profit of S$125 million a year ago, in the absence of profit from land sales in the Sino-Singapore Tianjin Eco-City coupled with fair value loss on the KrisEnergy warrants held.

The Offshore & Marine (O&M) Division incurred a net loss of S$23 million for 1Q 2018, compared to breakeven for 1Q 2017, due mainly to share of associated companies' losses in the current period. Through enhanced efficiency, the O&M Division achieved an operating profit of S$8 million for 1Q 2018, which is an improvement over S$4 million recorded in 1Q 2017.

Meanwhile, the O&M Division continues to pursue projects and opportunities in new markets and niche segments. In the year to date, the O&M Division has won new contracts of about S$580 million, or close to half of the S$1.2 billion secured for the whole of 2017. The latest orders comprise a newbuild harsh environment semisubmersible and a contract to build Singapore's first dual-fuel bunker tanker.

Financial Highlights

• Annualised ROE was 11.4% for 1Q 2018
• Net Gearing was 0.42x at end-March 2018
• Free cash inflow was S$261m in 1Q 2018 compared to an outflow of S$62m in 1Q 2017

Attachments:

Download - KCL 1Q2018 - Financial results
Download - KCL 1Q2018 - Presentation slides
Download - KCL 1Q2018 - Management speeches

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