Keppel posts significantly lower net profit for Q3

Keppel's revenue for the nine months was $4.8 billion, down 10.5 per cent year on year.
Keppel's revenue for the nine months was $4.8 billion, down 10.5 per cent year on year. PHOTO: BLOOMBERG NEWS

Keppel Corporation's third quarter net profit fell to "significantly lower" levels from the same period a year ago, as it emerges from a $697 million net loss in the preceding quarter.

Yesterday, the mainboard-listed conglomerate reported that despite swinging back into the black this quarter, it was still loss-making for the first nine months of this year due to $919 million of significant impairments recorded in the second quarter.

Revenue for the nine months was at $4.8 billion, down 10.5 per cent year on year from $5.4 billion, following decreased contributions from Keppel Offshore & Marine (O&M).

The group's net gearing was lower at 0.96x as at Sept 30, compared with 1.00x in the second quarter. This was mainly due to lower working capital requirements, it said. In the year to date, the group has raised more than $3 billion in loans and committed bank facilities.

Keppel's chief executive Loh Chin Hua said: "Keppel's key businesses have performed resiliently in the third quarter of 2020, with all key business units remaining profitable, except for Keppel O&M which continues to face very challenging conditions due to both the downturn in the sector and the reduced top line resulting from the Covid-19 pandemic and measures to contain its spread."

The offshore and marine arm's Q3 net loss comes on the back of continued disruptions related to Covid-19, despite a gradual return of its workforce, it said. "Keppel O&M will continue to face challenges in its profitability for the rest of the year as the industry continues to face headwinds amidst depressed oil prices."

However, its pivot into other market segments is "bearing fruit", it added. In the year to date, Keppel O&M has secured about $900 million worth of new contracts, of which offshore renewables and gas-related projects comprise about 72 per cent.

As at Sept 30, Keppel O&M's net order book stood at $4.1 billion, up from $3.5 billion as at end-June.

Since the start of the pandemic, Keppel O&M has put in place cost management measures, which will result in reduction in annual overhead costs of more than $90 million starting from next year, and is working on further cost reduction.

Keppel Infrastructure, on the other hand, continued to perform resiliently and recorded earnings before interest, taxes, depreciation, and amortisation (Ebitda) of $119 million for the first nine months of this year, slightly above the $115 million a year ago.

In the year to date, Keppel Infrastructure has secured $2.1 billion worth of waste-to-energy and district cooling contracts across Singapore, India and Thailand.

Meanwhile, Keppel Land sold about 2,030 homes in the first nine months of this year, a drop from 3,520 homes sold in the same period last year.

Keppel Telecommunications & Transportation's (T&T) new data centre project in partnership with Singapore Press Holdings has met with "strong demand from both existing as well as new customers"; M1, in which the conglomerate's T&T arm owns a stake, maintained a "stable" Ebitda of $202 million for the first nine months.

Keppel Corp shares closed seven Singapore cents, or 1.61 per cent, lower at $4.27 yesterday.

THE BUSINESS TIMES

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A version of this article appeared in the print edition of The Straits Times on October 30, 2020, with the headline Keppel posts significantly lower net profit for Q3. Subscribe