SINGAPORE (Jan 26): Keppel Corp posted a 49% on-year drop in earnings to $784 million for FY16 ended Dec, the lowest annual profit in a decade.
Full-year revenue fell 34.3% to $6.8 billion while operating profit fell 47.5% to $795 million.
The drop was largely due to lower contributions from Offshore & Marine (O&M) as well as additional provisions for impairment during the year, mainly from rightsizing of Keppel Offshore & Marine and impairments of investments and work-in-progress.
In 4Q16, the group posted earnings of $143 million, 64.7% lower compared to a year ago. This came on the back of a 34.4% fall in revenue to $6.8 million.
For FY16, Keppel’s O&M Division remained profitable despite the sharp downturn, ending the full year with a net profit of $29 million. But the division was forced to reduce its direct workforce by about 10,600 or 35%, with about 3,800 in Singapore and 6,800 overseas.
Keppel O&M also cut its yard capacity and have mothballed two overseas yards. In Singapore, it is in the process of closing three yards.
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The O&M division secured new contracts worth about $500 million for the full year.
The Property Division recorded a net profit of $620 million for FY16, with Keppel Land recording a higher net profit of $586 million compared to $564 million in 2015.
A total of 5,720 homes were sold in 2016, comprising about 3,800 units in China and another 1,520 units in Vietnam, with total sales value of about $2.3 billion. This is about 25% higher than the 4,570 homes sold in 2015.
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The Infrastructure Division posted a net profit of $99 million for the full year.
CEO Loh Chin Hua said, “All parts of the Keppel Group are working hard to ensure that we remain resilient, despite the headwinds. Recurring income contributed to 42% of the Group’s total net profit for the year. Gains from revaluations, divestments and reversal of prior impairments amounted to $270 million, before additional provisions for impairment during the year of $336 million.”
“We will continue to focus on growing stable, recurring income that will enable Keppel to ride out downcycles. Through the challenges, I am confident that Keppel will emerge stronger, anchored on our multi-business strategy,” added Loh.
The Board has proposed a final dividend of 12.0 cents per share; bringing total dividend of 20.0 cents per share for FY16.
Shares of Keppel closed 12 cents lower at $6.39.
