Keppel’s net profit improved significantly to S$300m in 1H 2021, reversing net loss of S$537 million in 1H 2020
Keppel Corporation Limited (Keppel) reported a net profit of S$300 million for the half year ended 30 June 2021, underpinned by profitability across all key business units. Net profit for the current period was a significant improvement over the net loss of S$537 million for 1H 2020, which had been impacted by S$930 million of impairments mainly related to the offshore & marine (O&M) business.
Excluding revaluations, impairments and divestments (RIDs) as well as COVID-19-related government grants in both years, the Group would have achieved a net profit of S$280 million in 1H 2021, compared to a net loss of S$72 million in 1H 2020. When compared on a similar basis, the Group’s operating performance in 1H 2021 was also a marked improvement of about 88% over the net profit of S$149 million recorded in 1H 2019, prior to the pandemic.
The Group’s revenue grew 16% to S$3,677 million in 1H 2021 from S$3,182 million in 1H 2020, bolstered by higher contributions from the Urban Development, Asset Management and Energy & Environment segments.
Keppel has made substantial strides towards its Vision 2030, which includes being more focused and disciplined in executing its mission to provide solutions for sustainable urbanisation. In June 2021, Keppel announced the signing of non-binding Memoranda of Understanding on the proposed combination of Keppel O&M and Sembcorp Marine, and resolution of Keppel O&M’s legacy rigs. The Group has also announced the planned divestment of its logistics business and has received bids, which it is currently evaluating.
Keppel has also announced the monetisation of over S$2.3 billion in assets since the asset monetisation programme was announced in September 2020, and has completed about half of these transactions to date. Through proactive asset monetisation, the Group registered improvements in its free cash flow as well as net gearing. In 1H 2021, free cash inflow was S$499 million compared to an outflow of S$664 million in 1H 2020. The Group’s net gearing was lowered to 0.85x as at 30 June 2021, compared to 0.91x as at 31 December 2020.
Reflecting confidence in the Group’s vision and strategy, the Board of Keppel Corporation has approved an interim cash dividend of 12.0 cents per share for 1H 2021, after ringfencing the S$318 million of impairments related to KrisEnergy’s liquidation. This interim dividend, which will be paid to shareholders on 19 August 2021, is significantly higher than 2020’s interim dividend of 3.0 cents and also higher than the interim dividend of 8.0 cents declared in 2019.
Mr Loh Chin Hua, CEO of Keppel Corporation, said, “Notwithstanding the continued impact of COVID-19 on the global economy, all of Keppel’s key business units were profitable in 1H 2021. As a Group, we have not only returned to profitability compared to 1H 2020 but have also done better than pre-COVID 1H 2019, excluding RIDs and COVID-19-related government grants.
“We have also made good progress towards Vision 2030. In the first half of 2021, we announced the proposed combination of Keppel O&M and Sembcorp Marine, as well as our venture into new growth areas such as subsea cables and decarbonisation solutions including electric vehicle charging, liquefied hydrogen and green ammonia supply. Our asset monetisation programme is also progressing streadily. We expect to surpass S$3 billion in asset monetisation well ahead of our three-year schedule, and aim to achieve the higher end of our S$3-5 billion target by the end of 2023.
“We are working towards achieving most of our Vision 2030 goals by 2025. Beyond organic growth, we are actively exploring M&A opportunities in our focus areas to grow the Group’s business and improve the quality of our earnings more quickly. As we execute Vision 2030, we believe that Keppel will emerge stronger, more relevant, and on a faster growth path post pandemic.”
In the Energy & Environment segment, Keppel O&M reported a net profit of S$107 million for 1H 2021 compared to the net loss of S$959 million a year ago, due to lower impairments and a share of Floatel’s restructuring gain. Keppel O&M’s net orderbook grew over 70% to S$5.7 billion as at end-June 2021, from S$3.3 billion as at end-2020, after securing the US$2.3 billion P-78 FPSO contract from Petrobras in May 2021. More recently in July 2021, Keppel O&M secured another FPSO topside fabrication project.
Meanwhile, Keppel Infrastructure continues to perform steadily, and is actively pursuing growth opportunities spanning electric vehicle charging, renewables, environmental sustainability, district cooling and other decarbonisation solutions in line with Keppel’s Vision 2030 goals. In July 2021, Keppel Infrastructure and its partner were selected by Singapore LNG for a Front End Engineering Design study to co-develop a Natural Gas Liquids Extraction Project on Jurong Island as part of the Singapore Green Plan 2030.
In the Urban Development segment, Keppel Land’s contribution improved 25% yoy to S$252 million for 1H 2021, underpinned by higher contributions from China and Vietnam property trading projects and divestment gains. Significantly, Keppel Land’s home sales doubled year-on-year to 2,650 units, bolstered by stronger performance across all key markets.
In the Connectivity segment, Keppel Data Centres commenced construction of the Genting Lane data centre in Singapore, which is expected to be service-ready in 2023, and also made steady progress on its data centre projects in Australia, Malaysia and Indonesia. The Group also expanded its presence in China’s data centre market with the completion of investments in two data centre projects in Huizhou and Shanghai through collaboration between Keppel Data Centres and Keppel’s private funds.
Meanwhile, M1’s transformation is showing early signs of improving postpaid customer ARPU, and is driving higher digital adoption among customers. Notably, M1 commenced its 5G standalone network trial in July 2021, and launched the world’s first Voice over 5G New Radio service on its 5G standalone network in collaboration with Samsung. In April this year, M1 also announced plans to realise the value of its network assets, which will free up capital that can be reinvested in new capabilities and other growth initiatives.
In the Asset Management segment, Keppel Capital’s contribution grew 23% yoy to S$64 million for 1H 2021 on the back of stronger operating results as well as mark-to-market gains from investments. Keppel Capital’s asset management fees also increased by 35% to S$111 million in 1H 2021, due mainly to more acquisitions and divestments completed, as well as Keppel Capital’s larger assets under management and new funds launched in 2020 and 2021.
Source: Keppel Corporation