Keppel Corporation Limited (SGX: BN4) is a conglomerate with major business segments that include offshore and marine, property, infrastructure, and investment.
The company has recently reported its first-quarter results for the year ended December 2018 (1Q FY2018). In this article, we will look at the good and the bad from the latest announcement.
But before we dig into the results, let’s have a quick overview of the numbers below.
Source: Keppel Corporation Result Presentation
The above is a quick overview of the key metrics from Keppel’s first-quarter FY2018 earnings update.
With that, let’s look at a number of positive points from the latest update.
Firstly, we can see that all financial metrics (see above) came in stronger on a year-on-year basis. Here, higher revenue was mainly driven by the Property and Infrastructure divisions. Similarly, net profit jumped by 34% mainly, due to stronger performance in the Property and Infrastructure segment (exclude on-off events).
Secondly, free cash flow improved from an outflow of S$ 62 million last year to an inflow of S$ 261 million this quarter. The improvement in free cash flow was mainly due to cash inflow from disposal of assets.
Thirdly, Keppel Corporation had net debt of S$ 5.1 billion, as at 31 March 2018, down from S$ 5.5 billion as at 31 December 2017. As a result, gearing declined to 0.42 times from 0.46 times.
Lastly, the Offshore and Marine segment’s net order book (excluding Sete Brasil) grew from S$3.9 billion as at 31 December 2017 to S$ 4.3 billion. The higher order book indicates that the oil and gas industry’s prospects might have just turned around recently.
And now the negative points.
To begin with, the Offshore and Marine segment had a challenging quarter with revenue down 31% year-on-year to S$ 332 million and loss before tax worsen by S$13 million to a loss of S$15 million.
Also, both Offshore and Marine and Investments segments reported net loss in the quarter, mainly due to share of associates losses in the quarter as opposed to share of associates profits in the previous year.
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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 Lawrence Nga doesn’t own shares in any companies mentioned.