Keppel Corporation has reported earnings of $1.02 billion in the FY2021 ended December, bolstered by improved performance across all business segments.
This is Keppel’s highest earnings achieved in the past six years since the offshore & marine (O&M) downturn, and marks a sharp reversal of FY2020’s net loss of $505.9 million.
Keppel is proposing a final cash dividend of 21 cents per share. This brings Keppel’s total FY2021 distribution to 33 cents per share, more than triple the 10 cents per share for FY2020.
The group’s recurring income grew 33% y-o-y and contributed $292 million to its net profit for FY2021, anchored by contributions from the group’s stakes in its REITs and Trust, infrastructure services, as well as asset management, says Keppel on Jan 27.
All of Keppel’s business segments recorded higher revenues, contributing collectively to a 31% increase in group revenue at $8,625 million in FY2021, compared to $6.57 billion in FY2020.
For 2HFY2021, net profit grew over 23 times to $723 million from $31 million in 2HFY2020, while its revenue rose 46% to $4,948 million over the same period.
In FY2021, the group achieved a positive return on equity (ROE) of 9.1%, compared to negative 4.6% a year ago.
The group’s free cash inflow was $1.75 billion for FY2021, compared to an outflow of $72 million in FY2020.
Keppel’s total cash dividend for FY2021 of 33 cents per share translates into a gross dividend yield of 6.4% on the company’s last transacted share price of $5.12 as at Dec 31, 2021. The proposed final dividend, if approved at the annual general meeting scheduled to be held on April 22, will be paid on May 12.
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Along with its FY2021 results, Keppel also announced a $500 million share buyback programme.
The $500 million scheme could take more than a year to be completed, says Keppel in a Jan 27 press release.
See: Keppel Corp announces 'sharp reversal' in 9M2021 net profit, 14% growth in revenue y-o-y
As part of Keppel’s Vision 2030 plans, the company has announced about $2.9 billion in asset monetisation since 4QFY2020. Of the amount, it has received about $2.7 billion in cash.
According to Keppel, the company is on track to exceed its $5 billion asset monetisation target by the end of 2023.
“The substantial capital unlocked from the asset monetisation programme would allow the company to fuel its organic and inorganic growth plans, especially in areas such as renewables, clean energy and decarbonisation solutions, and also reward shareholders for their continued confidence in the company through dividends,” says Keppel.
With the asset monetisation, Keppel’s net gearing has decreased from 0.91 times as at end-December 2020 to 0.68 times as at end-December 2021.
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Shares repurchased under the share buyback programme will be held as treasury shares which will be used in part for the annual vesting of employee share plans, and also as possible currency for future M&A activities under Vision 2030.
Loh Chin Hua, CEO of Keppel Corporation, says: “Keppel performed strongly in 2021 as we accelerated our Vision 2030 plans. The strong earnings growth and cash inflow, underpinned by our asset monetisation programme, allow us to pursue growth opportunities and reward shareholders with higher dividends. As the world focuses increasingly on climate change, we are well-placed to seize opportunities as a provider of solutions for sustainable urbanisation. We are in the right space, at the right time.”
On the progress of its business transformation, Keppel updated that discussions on the proposed combination of Keppel O&M and Sembcorp Marine were progressing steadily, with both parties undertaking detailed diligence and working towards signing definitive agreements by the end of 1Q2022.
The group also aims to reach a conclusion on the divestment of its logistics business in Southeast Asia and Australia by the end of 1Q2022.
In December 2021, Keppel’s proposed acquisition of the Singapore Press Holdings (SPH) portfolio was approved by Keppel’s shareholders at the company’s Extraordinary General Meeting. The proposed acquisition is now pending the scheme meeting to be called by SPH, where Keppel's scheme will be voted on by SPH’s shareholders.
Asked about the timeline of the proposed acquisition, Loh reiterates that the ball is currently in SPH's court. "We have already cleared all the conditions that we needed to clear and we're looking forward for the scheme meeting to be arranged by SPH for its shareholders to vote," says Loh at a media briefing.
Loh adds: "I can't really share much more than what I've said. I think from Keppel's side, we have completed all that we are required to do, including getting our [shareholders'] approval. So, all the conditions on our side have been cleared. I think it is really up to SPH now to call the scheme meeting for its shareholders to vote, and we would like to see that done, obviously, as quickly as possible."
Shares in Keppel Corp closed 6 cents lower, or 1.12% down, at $5.29 on Jan 27.
Photo: Keppel
