Keppel's net profit flops 21% to $160m in Q1

Profit contraction attributed to 70% divestment of interest.

Keppel Corporation’s net profit crashed 21% YoY to $160m in Q1 from $203m in 2019, according to its financial statement. This is despite its revenue posting a 21% jump to $1.86b over the same period.

The profit contraction was mainly due to an absence of gain from the divestment of a 70% interest in Dong Nai Waterfront City, Vietnam in 2019. On the other hand, its revenue rose thanks to higher revenues from offshore & marine projects, property trading projects, power and gas business, and the consolidation of M1.

Revenue growth was partly offset by lower contributions from property trading projects in China, environmental engineering projects, and asset management.

The group achieved an annualised return on equity of 5.7% with net gearing at 0.88x in Q1, compared to 0.85x in Q4 2019, due to acquisitions and investments. Free cash inflow was $37m over the same period compared to YoY outflow of $534m in 2019, attributable to lower working capital requirements.

The offshore & marine (O&M) division’s net profit halved to $3m in Q1 from $6m in Q1 2019, due to the share losses from associated companies. However, Keppel O&M’s operating profit was $28m in the same period, an improvement over the $3m recorded in 2019.

Net profit from the property division crashed 73% YoY to $35m in Q1 from $132m in Q1 2019, which is also attributable to the absence of gain from the disposal of a partial interest in Dong Nai Waterfront City, Vietnam and a tax write back a year ago.

Meanwhile, the infrastructure division’s net profit jumped to $174m in the same period, compared to $16m in 2019 due to a mark-to-market gain of $131m from the reclassification of Keppel Infrastructure Trust from an associated company to an investment.

The investments division on the other hand recorded a net loss of $52m in Q1, reversing the net profit of $49m in Q1 2019, attributed to the absence of remeasurement gains from previously held interests in M1, as well as mark-to-market losses on some investments.

Earnings per share for Q1 2020 recorded at 8.8 cents, down 21% YoY from Q1 2019’s 11.2 cents.