Keppel Q1 profits plunged 40% to $203m

The earnings decline was due to Keppel's property arm which saw profits crash 65%.

Keppel Corporation’s Q1 earnings crashed 40% YoY net to $203m from $337m in 2018 due to smaller gains from en-bloc sales of residential projects, according to a filing in SGX.

The decline was, however, countered by a $289m gain from the en-bloc sale of Keppel Cove in Zhongshan, China as compared to gains of $174m in the current period from the divestment of a 70% interest in Dong Nai Waterfront City, Vietnam and the re-measurement of previously held interests in M1 Limited (M1) at acquisition date.

In contrast to the earnings decrease, the company saw its revenue grow by 4% YoY to $1.5b. This was attributed to higher revenues from power and gas sales, infrastructure projects in Singapore and Hong Kong, asset management and the consolidation of M1, offset by lower contributions from property trading in Singapore.

Free cash outflow was at $617m in Q1 compared to an inflow of $248m in Q1 2018, mainly due to higher working capital requirements in the Offshore & Marine and Property divisions.

The Property Division became the largest contributor to the overall Q1 net profits as it profit plunged 65% YoY to $132m from $378m in 2018 no thanks to the absence of gains from the en-bloc sale of Keppel Cove in Zhongshan, China and lower contribution from Singapore property trading which was partly offset by gains from disposing a partial interest in Dong Nai Waterfront City, Vietnam.

The Offshore & Marine (O&M) registered a net profit of $6m, compared to a net loss of $23m a year ago, attributed to a share of results from associated companies which turned profitable year on year, as well as lower taxes.

The Infrastructure Division’s net profit of $16m was 38% YoY lower year because of lower contributions from the energy infrastructure and logistics businesses, as well as a share of losses from Keppel Infrastructure Trust in the current period as compared to a share of profits in the same period last year as a result of costs associated with the acquisition of Ixom in 2019.

Lastly, the Investments Division recorded a net profit of $59m for the first quarter, as compared to net loss of $44m in 2018. This was due mainly to fair value gains from the remeasurement of previously held interests in M1 as at its acquisition date, as well as higher contributions from Keppel Capital.