Keppel posts 39% fall in 2Q earnings to $153 mil on absence of en bloc property sales

SINGAPORE (July 18): Keppel Corporation reported a 38.4% drop in 2Q earnings ended June to $153.4 million, or 8.4 cents per share, from $249 million a year ago due mainly to the absence of en-bloc sales of development projects.

For 1H19, Keppel reported earnings of $356.3 million, 39.3% lower than a year ago. The board has approved an interim dividend of 8.0 cents per share for 1H19, which will be paid out on Aug 6.

Group revenue for 2Q19 increased 17% to $1.78 billion from the previous year – bolstered by strong performances from the investments division and the infrastructure division.

Revenue from the investments division surged 12.2 times to $306 million due mainly to the consolidation of M1 and higher revenue from the asset management business.

Revenue from the infrastructure division grew 12.2% to $726 million as a result of higher sales in the power and gas businesses as well as progressive revenue recognition from the Hong Kong Integrated Waste Management Facility project.

Revenue from the property division increased 11% to $271 million due mainly to higher revenue from China trading projects, partly offset by lower revenue from Singapore trading projects.

The property division sold about 2,100 homes with a total sales value of about $1.2 billion in the first half of 2019, higher than the 1,385 units in the same period last year. These included about 110 homes in Singapore, 1,140 in China, 610 in Vietnam, 50 in Indonesia and 190 in India.

Group pre-tax profit of $206 million was 31% lower than that of the corresponding quarter in 2018. Pre-tax profit of the property division decreased by $99 million to $161 million while pre-tax profit of the infrastructure division grew by $7 million to $51 million.

Group net debt increased by $3.9 billion at Dec 31 2018 to $9.47 billion as at June 30 while group net gearing ratio increased from 48% to 82% in the same period.

This was mainly due to $273 million of cash paid to shareholders in May as the final dividend for FY18, as well as $224 million incurred for the privatisation of Keppel T&T.

As at end June, cash and cash equivalents dropped 19.5% to $1.76 billion from a year ago.

In its outlook statement, Keppel says trade tensions so far have had a limited impact on the group. However, if tensions were to worsen, and the international supply chain and technology access threaten to bifurcate, this could have a significant impact on the international economic and operating environment and the group.

Says CEO Loh Chin Hua, “Against the backdrop of a volatile macro environment, Keppel has remained resilient, underpinned by our multi-business model and diversification across sectors and geographies. As we execute our businesses, we have continued to seek new opportunities and growth platforms, whether in renewables or cleaner fossil fuels such as LNG, or expanding our property business in high-growth cities such as Nanjing in China, or Ho Chi Minh City in Vietnam.”

Shares at Keppel closed 11 cents lower at $6.59 on Thursday before the results were released.