Keppel records highest-ever net profit; special dividend of KREIT units proposed 

Keppel has proposed giving its unitholders one KREIT unit for every 5 Keppel units held.

Keppel Corporation has reported a net profit of S$3.6b for the first six months of 2023, said to be its highest profit on record in its 55-year history.

In an SGX filing, Keppel noted that its S$3.3b disposal gain from the divestment of its offshore and marine (O&M) business propped up its half-year profits, which was significantly higher than last year’s S$498m.

Excluding gains from the O&M divestment, Keppel’s net profit is S$445m in H1 2023, 3% higher than in H1 2022.

With this, Keppel’s board approved an interim cash dividend of 15 cents per share for H1, to be paid to shareholders on 18 August. Interim dividend for H1 2022 was also 15 cents. 

Coupled with the FY2022 final cash dividend of 18 cents per share paid in May 2023, shareholders will be receiving a total cash dividend of 33 cents in 2023 for every Keppel share held. This is a yield of 4.7% based on Keppel’s closing share price of S$6.99 on 26 July. 

Special dividend in-specie
The company board has also proposed distribution for a special dividend in-specie for Keppel REIT units in commemoration of Keppel’s 55th anniversary.

Under the proposal, for every five Keppel Corporation shares held, Keppel shareholders will receive one KREIT unit.

One KREIT unit is traded at S$0.915 per unit as of closing on 26 July.

The proposed dividend in-specie is part of Keppel’s capital management initiatives and will further allow shareholders to own a stable investment with steady yield, Keppel Corporation said.

The special dividend will be subject to shareholders’ approval at an extraordinary general meeting (EGM) to be held later in 2023. Further details on the EGM will be announced in due course. 

Post distribution, Keppel will remain the largest unitholder of KREIT with an interest of about 37.1%.

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A monumental shift
Speaking about the results, Keppel Corporation CEO Loh Chin Hua said that the first six months of 2023 were “transformational” and “productive” for the company.

“Following the successful divestment of the O&M business, we embarked on a monumental shift to remove our conglomerate structure and become a global alternative real asset manager, with deep operating capabilities in Infrastructure, Real Estate and Connectivity,” Loh said. 

“The strong execution of our transformation plans has allowed us to create superior, tangible value for shareholders. Over the 18-month period from 1 January 2022 to 30 June 2023, Keppel’s total shareholder return reached 118%, outperforming STI’s 9.62% by more than 12 times,” Loh added in a statement on Keppel’s latest financial results.

Recurring income surged 62% to S$340m for FY2022/23, making up 76% of Keppel’s net income for the period. 

Revenue from continuing operations grew 11% to S$3.71b in H1, underpinned by higher contributions from the infrastructure and connectivity segments.

Regarding its debts, Keppel said that about 65% of its borrowings were on fixed rates as of end-June, with an average interest cost of 3.53% and a weighted tenor of about three years.