Keppel Corporation Announces its 1Q 2021 Business Update

Source: 4/22/2021, Location: Asia

Keppel Corporation Limited (Keppel) has today released its voluntary business update for 1Q 2021. Keppel Corporation recorded a net profit in the first quarter of 2021, which was slightly higher year-on-year. All key business units apart from Keppel Offshore & Marine (Keppel O&M) were profitable. Nevertheless, Keppel O&M’s performance has also improved quarter-on-quarter with EBITDA for 1Q 2021 turning positive due to improving margins and productivity. ?

The Group’s revenue was S$1,889 million for 1Q 2021, which was stable compared to S$1,857 million a year ago, mainly due to higher contributions from the Urban Development and Asset Management segments, offset by lower revenues from Energy & Environment.

The Group’s net gearing was lower at 0.88x as at 31 March 2021, compared to 0.91x as at 31 December 2020, mainly due to higher equity. The divestment of Keppel Bay Tower, which is targeted for completion in 2Q 2021, would have further reduced the Group’s net gearing to 0.83x as at 31 March 2021 had it been completed in 1Q 2021.

Mr Loh Chin Hua, CEO of Keppel Corporation, said, “Keppel’s business units made creditable progress in the first quarter of 2021, against the backdrop of a gradual recovery from the pandemic. In line with Vision 2030, we have continued to launch new initiatives, such as the Bifrost Cable System, which will grow our Connectivity business and provide an important platform to harness synergies across various business units including Keppel Data Centres, M1 and Keppel Capital.”

In the Energy & Environment segment, Keppel O&M returned to positive EBITDA in 1Q 2021, as a result of quarter on quarter improvements in margins and productivity. Apart from S$66 million of new contracts secured in 1Q 2021 for various upgrading and repair projects including wind turbine installation and gas-related vessels, Keppel O&M is presently in advanced discussions with Petrobras on the P-78 FPSO project. Keppel Corporation continues to make good progress with the organic transformation of Keppel O&M and is also exploring inorganic options.

Keppel Infrastructure continues to make good progress on its environmental projects in Hong Kong and Singapore, and has announced plans to form a joint venture with StarCharge to invest in, develop, own and operate electric vehicle (EV) charging infrastructure in Singapore, as well as pursue other EV-related opportunities in the region.

In the Urban Development segment, Keppel Land’s home sales tripled year on year to 1,360 units, underpinned by stronger performance in China, Vietnam and Singapore?. Keppel Land also completed three divestments in China, Vietnam and the UK during the quarter.

In the Connectivity segment, Keppel Telecommunications & Transportation (Keppel T&T) announced an investment of S$467 million in a joint build agreement with Facebook and Telkom Indonesia to jointly own and develop the world’s first subsea cable system that directly connects Singapore to the west coast of North America via Indonesia through the Java Sea and Celebes Sea. A binding term sheet has been signed with leading Philippine fibre broadband provider Converge Information & Communications Technology Solutions, Inc. (Converge) to grant Converge an Indefeasible Right of Use for one fibre pair on the main trunk of the Bifrost Cable System.

In the Asset Management segment, Keppel Capital continues to grow with the launch of a China logistics property fund with an initial equity commitment of about RMB1.4 billion, and the securing of a S$360 million separate account mandate from Dutch pension fund manager, PGGM.

Separately, KrisEnergy announced on 20 April 2021 that its restructuring plan was no longer viable and that material uncertainty existed over its ability to continue as a going concern, given the significantly lower estimated ultimate recovery and cashflow from the Apsara Mini Phase 1A development. Keppel Corporation had announced on the same day that it is, together with its financial advisor, evaluating the impact of KrisEnergy’s announcement and determining the best course of action for Keppel. A further update will be provided when the financial impact is ascertained.

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