Keppel’s one-off gains increased profits to $740m

Keppel Corp has posted their solid earnings for the second quarter, but its book order  was another story.

The net profit for the past three months ended last June 30, soared up by 147% to $739.5 million, after a sum of $422.2 million was included in the one-off gains.

Aside from these increases, profit went up by 6% to $317.3 million, yet the figure remained the ”highest-ever recorded by the group in a quarter”, according to Teo Soon Hoe, finance director of the group. Revenue also increased 21.2% to $3.2 billion.

However, since the start of the year, Keppel's offshore and marine business has not gained a greater rig order. It did not have any other orders for the recent building projects during the quarter. Its order book had decreased to $7.7 billion as of last month’s end, down from $9.5 billion as of March 31 and $10.8 billion as of last year’s end, with deliveries stretching up to 2012.

Choo Chiau Beng, chief executive of Keppel and chairman of the offshore marine division said, ”Of course, we are concerned (about the decline in the order book); we are in a cyclical downturn of the offshore and marine industry”.

He further added that the long-term fundamentals of Keppel still stay intact and the group will be able to withstand the cycle well.

“We are cautiously confident that we will get some (new orders). We are in a good position to win some more Brazilian contracts - exactly how much would be speculation”.

Last January, Petrobras (Brazilian state oil company) said that it had appropriated almost US$174.4 billion or S$252.1 billion, which was intended for the capital expenditure for the next four years, as well as spending on new exploration and production projects.

Mr. Choo said they were not expecting more cancellations of order book right now, and their focus was to make sure the active orders would be very well executed, within budget, and on time.

Keppel proposes 15 cents temporary dividend for every share, up from 14 cents last year.

The SPC’s sale of $1.47 billion to PetroChina and rights issue of Keppel Land had increased to $1.8 billion. Mr. Choo also added the funds will provide the company with good room to take value-creation opportunities.

Profit increased during the first half, up by 7.4% to $603 million record high, not including $422.2 million exceptional gains, up from $561 million during the previous period. Revenue increases by 27.3% to $6.2 billion.

This increase in revenue was mainly due to the offshore and marine division, which received stronger earnings and better margins on the order book.

Earnings per share also increased to 46.4 cents in the second quarter, up from 18.8 cents in the previous year.

As of June 30, the net asset value per ordinary share had increased from $2.89 to $3.45 as of December 31 last year.

Mister Choo noted,”Recovery looks to be in sight, although many believe things may get worse before getting better”. He also said “What is clear is that the path to a full and sustained recovery will be challenging”.