Keppel H2 profit rises 2.5%, posts record full-year profits on O&M unit sale

KEPPEL : BN4 0% posted a 2.5 per cent rise in net profit to S$439.9 million for the second half ended December, bringing full-year earnings to S$4.1 billion – a more than four times increase from a year earlier.

The full-year earnings – a record in the conglomerate-turned-global asset manager and operator’s 55-year history – was in big part led by gains from the major sale of Keppel Offshore & Marine (KOM) to Seatrium : S51 0%.

“For this (current) year, obviously I don’t have another KOM to sell,” quipped Keppel chief executive Loh Chin Hua, adding however that the group’s continuing operations fared “very well” in FY2023.

Net profit from continuing operations was up nearly 9 per cent to S$440 million for the second half. For the full year, that figure rose nearly 6 per cent to S$885 million. This included the accounting loss of S$111 million from the distribution of Keppel Reit units (distribution loss or DIS loss) to shareholders last November.

“If you take out the DIS loss, last year’s numbers were also...more than decent...quite good,” he said at a results briefing on Thursday (Feb 1).

The results translate to earnings per share (EPS) of S$0.246, up from S$0.242 in H2 FY2022.

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Revenue from continuing operations for H2 was nearly flat at S$3.3 billion, down 0.4 per cent from a year earlier. For the full year, revenue rose 5.2 per cent to nearly S$7 billion.

All three business segments were profitable. Keppel’s infrastructure and connectivity segments recorded revenue gains, while its real estate segment declined due to lower contributions from its China and Singapore property trading projects.

The infrastructure business was the brightest spot with full-year net profit more than doubling to S$699 million. This was driven by higher net generation and margins from the integrated power business, as well as special distribution from Keppel Infrastructure Trust.

Net profit in the connectivity segment rose 30 per cent to S$127 million, owing to improving earnings contribution from M1 and gains from capital recycling.

On the other hand, net profit of the real estate segment fell 8 per cent to S$426 million. The company cited the dip to lower fair value gains from investment properties and contribution from property trading projects in China, as well as higher net-interest expense.

The asset manager has proposed a final dividend of S$0.19 per share for FY2023, up from S$0.18 per share in FY2022. This brings the total cash dividend for FY2023 to S$0.34 per share, which includes a S$0.15 interim dividend paid in August 2023.

The total cash dividend translates to a yield of 4.7 per cent, based on Keppel’s Jan 31 closing price. The group plans to pay the dividend on May 8, after the books closure date on Apr 26.

Last May, Keppel shed its long-held conglomerate status and recast itself as a global asset manager and operator. This had also followed the sale of its O&M business by the company that used to be known as one of the world’s largest rig builders.

Since then too, it has shifted away from lumpy earnings – this was largely related to the O&M orderbook and property trading businesses – to growing recurring income.

This it has done markedly well. Last year, recurring income from continuing operations jumped 54 per cent to S$773 million from a year ago, making up 88 per cent of its net profit versus 60 per cent in FY22.

The infrastructure segment that houses Keppel’s sizeable power and renewables business was a big contributor to the shift. As at end-2023, about 60 per cent of the company’s generation capacity was contracted for three years and more.

“So, the lumpiness and the tough cliff in a feast or famine earnings profile is behind us,” remarked Cindy Lim, CEO of Keppel’s infrastructure division.

Keppel shares closed Thursday at S$7.15, down 0.1 per cent or S$0.01.