Keppel posts net loss of $697.6m for Q2

Impairments from the O&M segment contributed to the loss.

Keppel Corporation posts a record Q2 loss of $697.6m, the largest in two decades, dragged down by impairments worth $919m, a bourse filing revealed.

Net loss for H1 reached $537m compared to a $356m net profit registered a year earlier, due to impairments from the offshore & marine segment hitting $930m. Excluding impairments, the group would have recorded a net profit of $393m, 5% higher YoY, on the back of strong performances by other business segments.

H1 revenue was $3.18b, slightly lower than H1 2019’s $3.315m, brought about by reduced contributions from property trading projects in China, power and gas sales, environmental engineering projects and asset management.

Keppel’s O&M arm reported a net loss of $959m for H1, a huge step back from the $10m net profit a year ago, due mainly to $890m of impairments for contract assets, receivables, stocks and investments, including share of impairment provisions from Floatel. As of end-June the net orderbook stood at $3.5b, projected to last the O&M division for at least two years.

In addition, its O&M workforce in Singapore was slashed to about 1,200 for most of Q2 from about 24,000 in March 2020. The workforce has since recovered to about 5,000.

The property division recorded a net profit of $197m for H1, 25% lower YoY due to the absence of divestment gains from Dong Nai Waterfront City in Vietnam and lower investment income, which was partly offset by higher fair value gains on investment properties, as well as the disposal of interests in a mixed-use project in Jiangyin, China.

The infrastructure segment posted a net profit of $252m from $59m in H1 2019, mainly due to a $131m mark-to-market gain from the reclassification of the firm’s interest in Keppel Infrastructure Trust (KIT) from an associated company to an investment, as well as a gain from the sale Keppel DC REIT units.

To offset the downturns, the CEO and management of Keppel O&M have opted to cut their base salaries between 5% and 10%. The senior executive management of Keppel Corp will also take a base salary reduction of a similar amount, whilst the directors of Keppel Corp and Keppel O&M will take a 10% reduction in their annual fees.