Keppel's net profit grew by over 25% y-o-y in 1QFY2025 ended March 31, excluding legacy offshore and marine (O&M) assets, driven by strong and steady performance in the infrastructure segment, higher contributions from the real estate segment and stronger performance in asset management.
According to an April 24 announcement, the latter included a full quarter of contributions from Aermont Capital.
Recurring income, comprising profits from asset management and operations, made up more than 80% of Keppel's 1QFY2025 net profit, excluding the legacy O&M assets. Including the legacy O&M assets, net profit for 1QFY2025 more than doubled y-o-y, due mainly to lower losses from these legacy assets.
Keppel announced the monetisation of about $347 million in assets in the year to date, mostly from the divestments of real estate assets in China and Vietnam.
This brings its cumulative asset monetisation since October 2020 to about $7.2 billion, not including the divestment of Keppel Offshore & Marine (KOM), which would have added another $4.7 billion.
Keppel says it is in "advanced stages" of negotiating another approximately $550 million in real estate monetisation opportunities, "expected to be finalised in the next few months".
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With the termination of the segregated account agreement related to contingent liabilities from the KOM and former Sembcorp Marine combination, about $291 million in cash and 63.36 million Seatrium shares from the account have been released to Keppel.
Keppel says it is assessing its options to extract value from the remaining Seatrium shares.
CEO Loh Chin Hua says Keppel has had a "strong start" to 2025, with earnings improving meaningfully driven by stronger recurring income, and disciplined execution across platforms and divisions. "Our flagship funds are gaining traction, collectively raising about $4.9 billion of funds under management (FUM), bringing us closer to our FUM targets. We are also making steady headway in asset monetisation despite the challenging environment."
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In addition, Loh says the direct impact of the US tariffs on Keppel is expected to be limited, as Keppel is not engaged in the manufacturing or export sectors. "However, a trade war would be highly detrimental to the international economy, and could affect us indirectly through higher supply chain costs, reduced market confidence, exchange rate risks and the pace of asset monetisation. Nevertheless, we believe that the New Keppel, with stronger recurring income, would be better placed to navigate the volatility."
Fund management and investment
In 1QFY2025, Keppel generated $96 million in asset management fees, 9% higher y-o-y. On the back of stronger fundraising momentum, Keppel raised about $1.6 billion in equity year to date, about 3.5 times higher y-o-y.
On April 21, Keppel announced the successful first closings for Keppel Data Centre Fund III (KDCF III) and Keppel Education Asset Fund II, and the securing of a "significant capital commitment" for its Sustainable Urban Renewal (SUR) strategy.
Including another $400 million raised for the KDCF III in late-2024, the total capital commitments secured for Keppel's new private funds amount to $2.0 billion, representing approximately $4.9 billion in FUM.
Year to date, Keppel has completed about $2.7 billion in acquisitions and divestments, more than doubling the $1.1 billion in the same period last year.
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Highlights by segment
The infrastructure segment continued to deliver strong and steady performance y-o-y, says Keppel.
As at end-March, the 600-megawatt (MW) hydrogen-ready Keppel Sakra Cogen Plant reached commissioning readiness, and is on track to start operations in 1H2026.
During the quarter, the Company seeded a 39% stake in the 1.3-gigawatt (GW) Keppel Merlimau Cogen Plant to the Keppel Core Infrastructure Fund. Keppel says this demonstrates its ability to create value for its private funds and listed trust, while continuing to earn recurring income from asset management and operations and maintenance.
About 66% of Keppel's contracted power generation capacity was locked in for three years and above as at end-March. Long-term contract revenues from providing technology solutions and operations and maintenance services grew 31% y-o-y, reaching $6.3 billion.
These long-term contracts are expected to contribute more than $100 million in annual ebitda from 2025, augmenting the robust cash flow from the integrated power business.
Meanwhile, Keppel's real estate segment completed the construction and attained the Temporary Occupation Permit for Keppel South Central. It also secured a "leading financial services group" as the building's first anchor tenant, according to Keppel.
In the connectivity space, Keppel says it continued to make "good progress" on the Bifrost Cable System, on track to be ready for service in 2H2025, with cable laying operations 92% completed as at end-March.
During the quarter, Keppel Infrastructure Fund and Keppel Infrastructure Trust acquired a majority stake in Global Marine Group, a leading subsea cable solutions provider, bolstering Keppel's digital infrastructure strategy and strengthening its position as a connectivity ecosystem partner.
Meanwhile, M1 registered a higher ebitda y-o-y n 1QFY2025 and is on track to complete the decommissioning of its legacy technology stack in 2025.
Shares in Keppel opened 11 cents higher, or 1.72% up, at $6.51 on April 24.
Tables: Keppel
