Keppel Corp’s profits surge 11% in 2Q14 as offshore deals boom

It has secured new order wins worth $3.2bn in 1H14.

It has been a second quarter for Keppel Corporation, as the company’s core net profit saw an impressive 11% year-on-year surge in 2Q14.

According to DBS, offshore and marine operations were the key growth drivers for this period, while the property segment remains the company’s weakest link.

“Stripping out the S$21m impairment writeback, core net profit grew 11% y-o-y and 14% q-o-q to S$385m, making up 25% of our full year assumptions. Impressively, operating margin for O&M segment expanded 0.4ppts q-o-q to 14.6%. This lifted 1H14 net profits to S$724m, in line with our expectations, accounting for 47% of our FY14 estimate,” noted DBS.

Here’s more from DBS:

Key earnings growth driver was O&M. Revenue for the segment grew 13% y-o-y and 7% q-o-q while operating margin inched up to 14.6% vs 14.2% in 2Q13.

The sterling performance of the O&M segment was offset by lower contribution from Property. Investment segment also registered strong earnings on the back of higher sale of investments.

New order wins of S$3.2bn is impressive. This accounts for 53% of our assumed order wins of S$6bn for the year.

Keppel has been able to secure strong orders leveraging off their global network of 20 yards as part of its strategy to be close to customers.

Group order book hovered at c.S$14.1bn as of Jun14 (marginally down from S$14.4bn three months ago), providing visibility till 2019. Medium term industry fundamentals remain robust, backed by high oil prices, ageing jack ups, and moderate growth in E&P spending.