Revenue down 5.5% due to lower revenue from O&M and infrastructure
By VINCENT WEE
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KEPPEL Corp yesterday posted a 17.1 per cent rise in third-quarter net profit to $319.6 million from $272.9 million a year ago as higher margins from offshore and marine (O&M) and improved gains from property and infrastructure offset flat growth in investments after the divestment of SPC.
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| Mr Choo: The group has seen no drop in the price of newbuild semis so far |
Revenue, however, fell 5.5 per cent to $3.04 billion due to lower revenue reported by O&M and infrastructure.
For the first nine months, group revenue was 14.2 per cent higher at $9.22 billion. Net profit before exceptional items rose 10.6 per cent to $922.2 million. After exceptionals, mainly gains from the sale of SPC, net profit rose by 61.2 per cent to $1.34 billion, translating to basic earnings per share of 84.4 cents, up from 52.4 cents.
In Q3, profit after tax and minority interests (Patmi) from the key offshore and marine division, which still provides two thirds of the group's gains, rose 9 per cent to $215 million due to higher margins, although revenue fell 10 per cent to $2.12 billion.
Keppel's net orderbook is slowly shrinking, with the still quiet O&M market providing no significant new contracts in Q3, and has been reduced to $6 billion at the end of the quarter. This is the lowest level since Q1 2005, but will provide the group with a good base load of work, Keppel said.
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The division has completed and delivered three semisubmersible rigs, seven jackups and four major conversions/upgrades and has another 17 jobs to complete this year, said chief executive Choo Chiau Beng. There are some signs that activities are picking up with active enquiries and a number of tenders for new rigs, the group noted. In addition, Mr Choo noted that the group has seen no drop in the price of newbuild semis so far.
For the first nine months, O&M revenue rose 16 per cent to $6.5 billion while Patmi increased 26 per cent to $609 million.
In Q3, property Patmi jumped 46 per cent to $54 million. Revenue rose 72 per cent to $362 million. For the first nine months, revenue was 26 per cent higher at $909 million and Patmi rose 15 per cent to $133 million.
This was mainly due to progressive revenue recognition of the Reflections at Keppel Bay and the completion of The Sixth Avenue Residences while profit rose on higher revenue recognition from the sale of residential properties and share of profit of associated companies developing Marina Bay Residences in Singapore and The Botanica in Chengdu, China.
The property market for Singapore and the region continued to gain momentum in Q3 as market sentiment strengthened amid further signs of economic recovery, Keppel said. It saw strong demand for new homes in Singapore and China. Residential property sales had also gradually picked up in Vietnam, India and Indonesia, with more sales seen in these markets in Q3. It will review its option to launch new projects and re-launch existing projects in its pipeline. Singapore office rentals are also expected to bottom out as business confidence returns and the group's significant portfolio of new office buildings in the New Downtown is expected to benefit from the recovery.
Keppel's infrastructure division reported 67 per cent Patmi growth to $25 million in Q3 while revenue fell 14 per cent to $548 million. For the first nine months, infrastructure revenue rose 2 per cent to $1.77 billion while Patmi jumped 98 per cent to $81 million. Higher revenue from Keppel Integrated Engineering's engineering, procurement and construction (EPC) contracts was partially offset by lower sales from Keppel Energy due to lower fuel prices.
Further contributions will come from the acquisition of the Senoko Incineration Plant, which was completed in August, and the Tuas South incineration plant and domestic solid waste project in Qatar when they come online.
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