Keppel Corp has reported revenue of $2.07 billion for 1QFY2022 ended March, up 9% over the preceding year’s quarter.
The growth was mainly from higher contributions from its energy and environment business segments.
Earnings for the quarter was “higher”, according to Keppel in its 1QFY2022 business update.
The growth at its bottomline was seen across most of its business units with the exception of urban development.
Net gearing, meanwhile, was largely stable at 0.69x as at March 31, versus 0.68x as at Dec 31 2021.
Keppel Offshore and Marine was able to see further improvement. During the quarter, this unit managed to achieve a “significant reduction” in its net loss and even managed to achieve an operating profit.
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During the quarter, Keppel O&M won $76 million worth of new contracts in 1Q 2022, bringing its total net orderbook to $4.8 billion, of which 37.5% are for renewable energy-related projects.
Keppel O&M is also trying to rent out, or sell the several rigs it has on hand. “With rising oil prices and improving market conditions, Keppel remains confident that Keppel O&M’s legacy rigs can be substantially monetised over the next three to five years,” the company states.
Loh Chin Hua, Keppel's CEO, sees the rig market improving and that utilisation rates are improving quite quickly.
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"There is an increase in activity and inquiries are coming from players looking for bareboat charter and to purchase the rigs," says Loh at the earnings call on April 21.
"The preference is to sell the rigs if the right value is accorded to the asset. We would be very open to bareboat charter because it increases the value of the asset. We are open to working with all our clients, to provide different solutions to participate in the tenders that are in the market," he adds.
Keppel is in the midst of trying to negotiate a merger of its O&M business with Sembcorp Marine. Following two rounds of delays, the parties have committed to reaching a deal by April 30.
Keppel has an on-going three-year-long asset monetization programme so that it can redeploy the freed up cash into new growth areas, such as renewable energy.
According to Keppel, it has sold off more than $3 billion worth of assets it had earlier ear-marked for sale. It is confident it can bring this total to $5 billion by end of next year.
“We will continue to pursue our asset-light strategy by unlocking capital for reinvesting into new growth areas while tapping third-party funds to grow with speed and scale,” says Loh.
“We are excited by the progress made on the myriad of growth opportunities across renewables, new energy and decarbonisation solutions in line with our mission to provide solutions for sustainable urbanisation and climate action,” adds Loh.
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During 1Q2022, Keppel Capital's asset management fees grew by almost 70% y-o-y to $71 million. This was partly due to $2.5 billion worth of acquisitions, including Keppel Infrastructure Trust's ARAMCO transaction.
"When we raise new funds, fees are a percentage of funds raised; we charge on committed capital, not on capital deployed. When we do an acquisition, we get a bump up in fees," Loh observes.
As at Dec 31, 2021, Keppel Capital's AUM was $42 billion, and the group is looking to grow this.
Keppel Corp shares closed April 21 at $6.65, unchanged for the day, up 28.63% year to date.
