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Keppel Corp swings back to the black in 1H21; interim dividend jumps to 12 cents

Felicia Tan
Felicia Tan7/29/2021 6:12 PM GMT+08  • 5 min read
Keppel Corp swings back to the black in 1H21; interim dividend jumps to 12 cents
The dividend, which is significantly higher than the 3.0 cents per share paid out for the 1HFY2020, will be paid out on Aug 19.
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Keppel Corporation has reported earnings of $299.8 million for the 1HFY2021 ended June, reversing from its net loss of $537.1 million in the 1HFY2020.

This was due to the group seeing profitability across all key business units during the half-year period. All four segments also recorded better performances, excluding the gains from the reclassification of Keppel Infrastructure Trust (KIT) and the sale of units in Keppel DC REIT in the 1HFY2020, says CEO Loh Chin Hua in an address via webcast on July 29.

In addition, the net profit in the 1HFY2021 also reflects the absence of the $930 million in impairments mainly related to the offshore & marine (O&M) business in the corresponding period in the 1HFY2020.

Excluding revaluations, impairments and divestments (RIDs) as well as Covid-19- related government grants in both years, the group would have recorded net profit of $280 million in the 1HFY2021 compared to the net loss of $72 million in the 1HFY2020.

For the 1HFY2021, earnings per share (EPS) stood at 16.4 cents compared to the loss per share of 29.4 cents on a diluted basis.

See also: Keppel Capital secures US$600 mil for global infrastructure projects from international financial institutions

Revenue during the period increased by 15.5% y-o-y to $3.68 billion due to higher revenue from the urban development, asset management, as well as energy and environment segments.

The figure was offset by the lower revenue from the offshore and marine business, the completion of Keppel Marina East Desalination Plant project in June in 2020, as well as the absence of revenue from the Doha North Sewage Treatment Works due to the cessation of the operation and maintenance contract in July 2020.

In the energy and environment segment, Keppel O&M reported a net profit of $107 million for the 1HFY2021, compared to the net loss of $959 million the year before due to lower impairments and a share of Floatel’s restructuring gain.

Keppel O&M’s net order book grew over 70% y-o-y to $5.7 billion as at end-June.

Keppel Infrastructure’s contribution for the 1HFY2021 remains “stable” at $60 million. It is actively pursuing growth opportunities which includes electric vehicle (EV) charging, renewables, environmental sustainability, district cooling and other decarbonisation segments.

In the urban development segment, Keppel Land’s contribution increased 25% y-o-y to $252 million due to higher contributions from China and Vietnam property trading projects and divestment gains. Keppel Land’s home sales doubled y-o-y to 2,650 units.

Keppel Data Centres, in the connectivity segment, began construction of the Genting Lane data centre in Singapore. The centre is expected to be service-ready in 2023. The group has made progress in its data centre projects in Australia, Malaysia and Indonesia, and has expanded its presence in China’s data centre market with the completion of its investments in Huizhou and Shanghai.

M1 saw lower y-o-y contribution of $21 million due to lower roaming and prepaid revenue.

Its postpaid customer base, however, grew 5% y-o-y to over 1.6 million.

Keppel Capital’s contribution for the 1HFY2021 grew 23% y-o-y to $64 million due to stronger operating results as well as mark-to-market gains from investments.

Its asset management fees increased by 35% y-o-y to $111 million due to more acquisitions and divestments completed.

The group’s net gearing, as at June 30, stood at 0.85 times, compared to the 0.91 times as at Dec 31, 2020.

The board, for the 1HFY2021 has declared an interim cash dividend of 12.0 cents per share for the 1HFY2021 after ringfencing the $318 million of impairments related to the liquidation of KrisEnergy.

The dividend, which is significantly higher than the 3.0 cents per share paid out for the 1HFY2020, will be paid out on Aug 19.

For more stories about where the money flows, click here for our Capital section

As at June 30, cash and cash equivalents stood at $2.33 billion.

“Notwithstanding the continued impact of Covid-19 on the global economy, all of Keppel’s key business units were profitable in 1HFY2021. As a group, we have not only returned to profitability compared to 1HFY2020 but have also done better than pre-Covid 1HFY2019, excluding RIDs and Covid-19-related government grants,” says Loh.

“We have also made good progress towards Vision 2030. In the first half of 2021, we announced the proposed combination of Keppel O&M and Sembcorp Marine, as well as our venture into new growth areas such as subsea cables and decarbonisation solutions including electric vehicle charging, liquefied hydrogen and green ammonia supply. Our asset monetisation programme is also progressing steadily. We expect to surpass $3 billion in asset monetisation well ahead of our three-year schedule, and aim to achieve the higher end of our $3-5 billion target by the end of 2023,” he adds.

“We are working towards achieving most of our Vision 2030 goals by 2025. Beyond organic growth, we are actively exploring M&A opportunities in our focus areas to grow the Group’s business and improve the quality of our earnings more quickly. As we execute Vision 2030, we believe that Keppel will emerge stronger, more relevant, and on a faster growth path post pandemic.”

Shares in Keppel closed 11 cents higher or 2.1% up at $5.39 on July 29.

Photo: Keppel

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