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Keppel Corporation’s First Quarter Results

Keppel Corporation (SGX: BN4) released its first quarter results yesterday. Quarterly net profit fell a steep 53% from S$751m last year to S$357m while earnings per share also fell by the same percentage, from S$0.419 to S$0.198. Excluding revaluation, major impairment and divestments, the company’s quarterly profit and EPS would stand at S$331m and S$0.184.

The company’s top-line for the quarter had shrunk by 35% from S$4.27b a year ago to S$2.76b. The quarter’s seemingly poor performance is consistent with management’s expectations and previous communication that Keppel Corp “does not expect to repeat 2012’s results in 2013”.

Let’s take a look at Keppel Corp’s individual businesses. Its Offshore & Marine segment saw quarterly revenue decrease by 14.5% from S$1.99b last year to S$1.70b. The segment earned S$207.8m in profit for the quarter, an 11.7% decline from last year’s S$235.3m. Keppel Corp’s Chief Executive Officer, Mr Choo Chiau Beng has commented that the O&M segment will continue to “benefit from growing energy demand. Years of underinvestment and the need to replace reserves and increase production are sustaining high levels of offshore capital expenditures”.

On a brighter note, shareholders will be pleased to know that Keppel Corp has built almost 50% of the world’s jack-up rigs since 2000 and its KFELS B Class rig is now an industry benchmark. The company has delivered 42 such rigs since 2000 and there are 21 more on order. Keppel Offshore & Marine now has S$13.1b worth of contracts in its net orderbook that stretches into 2019.

Moving on to the Infrastructure segment, top-line for the quarter grew by 9.8% from S$683.1m last year to S$757m. Quarterly profit improved significantly year-on-year, doubling from S$27.2m to S$54.2m.

Some highlights of the Infrastructure segment include the Keppel Merlimau Co-generation Plant’s first unit (with a 400MW generation-capacity) gaining operational status. The plant is expected to be fully operational by mid-2013 with a capacity of 1300MW.

Keppel Corp’s Property segment saw quarterly revenue decline by 80% from S$1.52b last year to S$298.3m while profit also dropped by a similar magnitude from S$392.5m to S$79.8m. The drop in revenue and profits were attributed to sales of units from Reflection at Keppel Bay that occurred in 2012. The governments of China and Singapore have both enacted property price-cooling measures recently but Keppel Corp’s confident that these measures will sustain the health of both countries’ property markets and benefit the company in the long-term.

Shares of the company closed at $11.25 on Thursday with a PE of 11 and dividend yield of 4%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.