Keppel Corporation profits dropped 39.3% to $356.28m in H1

The lack of en-bloc sales and lower contributions from property trading weighed on its earnings.

Keppel Corporation’s profits crashed 39.3% YoY to $356.28m in H1 from $586.52m in H1 2018, an announcement revealed. However, its revenue edged up 10.8% YoY to $3.32b from $2.99b.

Its earnings per share (EPS) fell 39% YoY from $0.323 to $0.196 in H1.

For Q2, the firm’s profits declined 38.4% YoY from $249.05m to $153.39m, extending the 40% drop witnessed in Q1. On the other hand, revenue was up 17.2% YoY to $1.78b from $1.52b, whilst its EPS dropped 39% YoY from $0.137 to $0.084 for the quarter.

It blamed its dismal earnings performance to the absence of en-bloc sales of property projects, as well as lower contribution from Singapore property trading. Its property division recorded a net profit of $262m for H1, which was 57% lower YoY. The division sold some 2,100 units in H1, up 52% YoY on the back of stronger performance in China and Vietnam.

Also read: Higher renewed rents could uplift Keppel REIT

Meanwhile, the firm witnessed stronger performances from Keppel Offshore & Marine (O&M), Keppel Infrastructure and Keppel Capital.

The O&M division reported net profit of $10m for H1 2019, compared to a net loss of $40m in 2018, due mainly to higher investment income, lower net interest expense and a higher share of associated companies’ profits. As at end-June 2019, the O&M Division won quality contracts worth about $1.9b, higher than the total value of new orders secured in the whole of 2018.

“These include offshore wind projects worth about $720m from established renewable energy customers, namely Tennet Offshore and Ørsted. As at end June 2019, the division’s net orderbook stood at $5.5b, the highest level since 2016, excluding projects for Sete Brasil,” the firm explained.

Also read: Keppel O&M clinches $130m worth of contracts from repeat customers

Keppel’s infrastructure division recorded a net profit of $59m in H1, underpinned by stronger performance across all of Keppel Infrastructure’s business segments such as energy infrastructure, environmental infrastructure and infrastructure services.

However, in the absence of a dilution gain arising from Keppel DC REIT’s private placement exercise in H1 2018, the division’s overall earnings were 11% lower YoY, Keppel noted.

“In H1, Keppel Infrastructure progressed steadily with the development of the Keppel Marina East Desalination Plant and the Hong Kong Integrated Waste Management Facility, both of which will contribute long term recurring income when completed in 2020 and 2024, respectively. Keppel Electric is currently the leading electricity retailer in the Open Electricity Market (OEM), having secured over 150,000 household customers,” the firm said.

Keppel’s investments division also reversed its net loss of $46m in H1 2018, recording a net profit of $25m in 2019. This was thanks to a fair value gain from the remeasurement of previously held interests in M1, as well as higher contributions from Keppel Capital and the consolidation of M1’s results.

These, however, were partly offset by net interest expense in the current period as compared to net interest income in H1 2018, a higher fair value loss on KrisEnergy warrants, charges related to the acquisition of M1, as well as a provision for impairment of an associated company.

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