Keppel Achieves Record 9-Month Profit, Secures $5.2B in New Contracts
Keppel Corp. has achieved a record attributable profit of $834 million for the first nine months of this year. Earnings per share were 52.4 cents and annualised return on equity remained above 20% at 21.5%. Economic Value Added of $614 million was $27 million higher than that of the corresponding period in the previous year.
Group revenue in the third quarter of $3,216 million was 24% above that of the corresponding quarter in 2007. Higher revenues were reported by all divisions except for Property Division which was affected by the softer market condition. Group attributable profit of $273 million was 10% above the same quarter in the previous year. Higher profits were reported by Offshore & Marine and Infrastructure Divisions. However, profits from Property Division and SPC were lower.
For the nine months to-date, Group revenue of $8,071 million was $998 million or 14% above that of the corresponding period in 2007. Revenue from Offshore & Marine Division of $5,581 million was 11% higher. The division completed and delivered 29 vessels on schedule for its customers. Revenue from Property Division of $722 million was 47% lower. The decrease was due to the absence of significant launches in the current year. Rental income from investment properties increased due to higher rental rates and occupancy. Revenue from Infrastructure Division increased by almost two-fold to $1,742 million. Revenue generated from the cogen power plant in Singapore and environmental EPC contracts contributed to the significant increase in revenue.
At the pre-tax level, Group profit of $1,200 million was 6% higher than the first nine months with increased contribution from Offshore & Marine, Infrastructure and Investments, partially offset by lower contribution from Property. Earnings from Offshore & Marine Division of $646 million were 18% above the previous year. Operating profit and contribution from associated companies were higher. The Property Division posted profit of $268 million, $73 million or 21% lower than the previous year. The decrease was due to the lower sales of residential properties and share of profit from associated companies. Infrastructure Division continued to make encouraging progress, contributing $52 million to Group pre-tax profit. Profit from Investments was higher
because of lower interest cost and higher investment gains, partially offset by lower profit from SPC.
The income tax expenses of the Group included a write-back of $6.2 million for tax provision in respect of prior years. After minority share of profit, the attributable profit to shareholders of $834 million was $76 million or 10% higher than the corresponding period in 2007. Offshore & Marine Division remains the largest contributor to attributable earnings with 58%, followed by Investments with 23%, Property Division with 14% and Infrastructure Division with 5%.
In the opinion of the Directors, no factor has arisen between September 30, 2008 and the date of this report which would materially affect the results of the Group and the Company for the period just ended.
Outlook for the global economy has deteriorated and the world is grappling with the prospect of slower economic growth. Nonetheless, this is not expected to have a significant impact on the overall performance of the Group for the full year 2008.
Keppel Offshore & Marine has secured $5.2 billion of new contracts for the nine months to-date. The outstanding net order book of $13.0 billion with deliveries into 2012 are expected to keep our yards busy. The Offshore & Marine Division will continue to be the largest contributor to the profit of the Group. Our outstanding contracts are cashflow positive and progressing on schedule. We continue to receive active enquiries on new orders. Our track record of on-time delivery and our suite of proprietary rig design will put us in good stead in competing for these orders.
The slower economic growth in the world is expected to result in the softening of the property market. Sales of Singapore and regional private residential properties in the first nine months of this year have been subdued. The progressive recognition of revenue and profit of residential properties sold in the past two years is expected to provide a good base for the Property Division, until confidence returns to the market. Our Property Division is in a position to ride through the current market gyrations and seize opportunity as the market stabilizes.
In the Infrastructure Division, our portfolio of sovereign sponsored projects in energy and environmental engineering will provide the division with a core base of revenue and profits. The division will continue to seek out opportunities for more projects as valuations moderate and the market consolidates.
The Group is virtually debt free and the balance sheet is strong. We will brace ourselves to meet the challenges in this difficult market and seize opportunities as the financial turmoil unfolds.
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