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What Investors Need to Know About Keppel Corporation Limited’s 2017 Earnings

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Yesterday, Keppel Corporation Limited (SGX: BN4) announced its financial results for the full year ended 31 December 2017 (FY2017). Here are some things worth noting from the earnings announcement:

1. Keppel Corporation has four business divisions, namely, Offshore & Marine (O&M), Property, Infrastructure and Investments. The conglomerate’s revenue for the year came in at S$5.96 billion, down 11.9% year-on-year.

2. Both the O&M and Property divisions posted lower revenues while the other two divisions saw their incomes rise for FY2017.

3. Mainly due to a one-off penalty arising from Keppel O&M’s global resolution with criminal authorities and related expenses that totalled S$618.7 million, Keppel Corporation’s net profit plunged 72.4% to S$216.7 million. You can learn more about the saga here.

4. Consequently, earnings per share (EPS) fell 72.5% to 11.9 cents.

5. Excluding the one-off charges, the group would have achieved a net profit of around S$836 million for FY2017, up 7% as compared to FY2016’s S$784 million. The adjusted EPS would have been 46 cents.

6. As at 31 December 2017, Keppel Corporation had S$2.27 billion in cash hoard with total loans of S$7.79 billion. This translates to a net debt position of around S$5.52 billion, an improvement from S$6.97 billion in net debt that it had at the end of 2016.

7. Return on equity (ROE) for FY2017 dropped to 1.9% from 6.9% in FY2016 . Excluding the one-off expenses, ROE would have been 7% for the year.

8. The conglomerate generated S$1.38 billion in cash flow from operations in FY2017. With capital expenditure coming in at S$684.3 million, it brought in free cash flow of S$693.1 million for the year. In comparison, in FY2016, it raked in negative free cash flow of S$498.2 million.

9. Keppel Corporation has proposed a final dividend of 14 cents per share. Including the interim dividend already paid out, the total dividend for 2017 would be 22 cents per share, an increase from 20 cents per share dished out in 2016.

10. Loh Chin Hua, the chief executive of the group, said:

“The global resolution reached by Keppel O&M brings to an end what has been a painful chapter for Keppel. We have put in place effective compliance controls to ensure that this does not happen again. With the issue now behind us, we look forward to continuing on our growth trajectory and building a more disciplined and sustainable business – a Keppel that will remain trusted and admired by all our stakeholders.”

Keppel Corporation is currently going at S$8.51 per share. This translates to a price-to-earnings ratio of 71.5, including the one-off charges, or 18.5 without those expenses. The dividend yield is at 2.6%.

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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 Sudhan P doesn’t own shares in any companies mentioned.