27 January 2022

Keppel’s FY 2021 net profit surges to S$1.02 billion, the highest in 6 years

  • Strong results & earnings growth:
    • Full year net profit crossed S$1 billion mark for first time since FY 2015.
    • 2H 2021’s net profit grew to S$723 million, from S$31 million in 2H 2020.
    • Group revenue rose 31% to S$8.63 billion in FY 2021 from S$6.57 billion in FY 2020.
    • Free cash inflow surged to S$1.75 billion in FY 2021 from S$72 million outflow in FY 2020.
  • Robust asset monetisation: Announced monetisation of S$2.9 billion in assets from
    4Q 2020 to end-2021 and collected S$2.7 billion in cash.
  • Significantly higher dividends: Proposing final cash dividend of 21.0 cts/share. FY 2021’s total distribution would be 33.0 cts/share, more than triple the 10.0 cts/share for FY 2020.
  • Announced S$500 million Share Buyback Programme.

Keppel Corporation Limited (Keppel) reported strong earnings growth with a net profit of S$1.02 billion for the full year ended 31 December 2021, bolstered by improved performance across all business segments. This is the highest earnings achieved in the past six years since the offshore & marine (O&M) downturn, and marks a sharp reversal of FY 2020’s net loss of S$506 million.  

The Group’s recurring income grew 33% year-on-year (yoy) and contributed S$292 million to the Group’s net profit for FY 2021, anchored by contributions from the Group’s stakes in its REITs & Trust, infrastructure services, as well as asset management.

All business segments recorded higher revenues, contributing collectively to a 31% increase in Group revenue at S$8,625 million in FY 2021, compared to S$6,574 million in FY 2020.

The Group also performed strongly in 2H 2021, with net profit growing over 23 times to S$723 million from S$31 million in 2H 2020, while its revenue rose 46% to S$4,948 million over the same period.

In 2021, Keppel continued to accelerate the execution of the Group’s Vision 2030, making significant progress in various goals spanning asset monetisation, business transformation and sustainability, in addition to financial performance. From October 2020 through December 2021, Keppel announced the monetisation of S$2.9 billion in assets and collected S$2.7 billion of this in cash.

Keppel’s asset-light business model and strategy to proactively monetise its assets have contributed to marked improvements in the Group’s return on equity (ROE), free cash flow as well as net gearing. In FY 2021, the Group achieved a positive ROE of 9.1%, compared to negative 4.6% a year ago. The Group’s free cash inflow was S$1.75 billion for FY 2021, compared to an outflow of S$72 million in FY 2020, while its net gearing was 0.68x as at 31 December 2021, down from 0.91x at the end of 2020.

On account of the strong results achieved, the Board of Keppel Corporation will be proposing a final cash dividend of 21.0 cents per share for FY 2021, bringing the total cash dividend for FY 2021 to 33.0 cents per share, which is more than triple that of FY 2020. This translates into a gross dividend yield of 6.4% on the Company’s last transacted share price of S$5.12 as at 31 December 2021. The proposed final dividend, if approved at the annual general meeting scheduled to be held on 22 April 2022, will be paid on 12 May 2022.

Mr Loh Chin Hua, CEO of Keppel Corporation, said, “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.

“The Keppel of tomorrow will be defined by our focus on Sustainability, being Asset Light, and harnessing Technology. I am confident that, guided by Vision 2030, we will emerge stronger, more relevant, and on a faster growth path than before.”

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 1Q 2022. The Group also aims to reach a conclusion on the divestment of its logistics business in Southeast Asia and Australia by the end of 1Q 2022.

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 the Keppel Scheme will be voted on by SPH’s shareholders.

Over the past few years, Keppel has stepped up efforts to invest in start-ups and venture capital funds that will give the Group early access to intellectual property and technology across its focus areas. Notably, Keppel’s investment in leading electric vehicle battery business, Envision AESC[1], yielded fair value gains of S$277 million in FY 2021, while its investment in iGlobe Partners Platinum Fund I yielded dividends of S$56 million in FY 2021.

During the year, Keppel also made bold strides forward in other Vision 2030 targets, such as strengthening governance, driving innovation, enhancing employee engagement, and contributing to the community. The Group achieved its zero-fatality target in 2021 and recorded improvements across metrics such as Total Recordable Injury, Accident Frequency and Accident Severity Rates. Reflecting its commitment to sustainability, Keppel announced its target to halve the Group’s Scope 1 and 2 carbon emissions by 2030 from 2020 levels and achieve net zero by 2050.

More details on the business segments’ updates for FY 2021 can be found in the addendum to this media release.

Separately, Keppel also announced today, a S$500 million Share Buyback Programme that will see the Company progressively repurchasing its shares from the open market. The shares repurchased 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 merger and acquisition activities. As Keppel embarks on acquisitions, especially of founders’ platforms, using Keppel shares as acquisition currency would help to align the interests of these founders with Keppel’s interests. 

 

– END –

 

Responsibility Statements

The directors of the Company (including those who may have delegated detailed supervision of this media release) have taken all reasonable care to ensure that the facts stated and opinions expressed in this media release which relate to the Company (excluding information relating to SPH) are fair and accurate and that there are no other material facts not contained in this media release, the omission of which would make any statement in this media release misleading. The directors of the Company jointly and severally accept responsibility accordingly.

Where any information has been extracted or reproduced from published or otherwise publicly available sources or obtained from SPH, the sole responsibility of the directors of the Company has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this media release. The directors of the Company do not accept any responsibility for any information relating to SPH.

 

ADDENDUM

Financial Highlights

  FY 2021
(S$ m)		 FY 2020
(S$ m)		 Change (%) 2H 2021
(S$ m)		 2H 2020
(S$ m)		 Change (%)
Revenue 8,625​ 6,574 31 4,948 3,392 46
Operating Profit 898 8 >500 710 157 352
Net Profit/(Loss) 1,023​ (506)​ n.m.f.​ 723 31 >500
Earnings/(Loss)
per Share		 56.2​ cents (27.8) cents n.m.f. 39.7 cents 1.7​ cents >500

Note: n.m.f denotes no meaningful figure.

  • ROE was 9.1% for FY 2021, compared to negative 4.6% for FY 2020
  • Net gearing was 0.68x as at end-2021, down from 0.91x at end-2020
  • Free cash inflow was S$1.75 billion in FY 2021, compared to an outflow of S$72 million in
    FY 2020
  • A final cash dividend of 21.0 cents per share will be proposed for FY 2021

 

Energy & Environment

The Energy & Environment segment narrowed its net loss significantly to S$414 million for FY 2021 compared to the net loss of S$1,181 million for FY 2020, with lower impairments, as well as a share of Floatel International’s (Floatel) restructuring gain.

Notwithstanding lower COVID-19-related government grants, Keppel O&M’s performance improved yoy with higher revenue recognition from its projects, coupled with a reduction in overheads, and a lower share of losses from associated companies[2]. Keppel O&M’s net loss of S$77 million[3] for FY 2021, was a significant reduction from S$1,194 million for FY 2020. At the Op Co[4] level, Keppel O&M achieved a net profit of S$66 million for FY 2021. During the year, Keppel O&M secured S$3.5 billion of new orders. Its net orderbook stood at S$5.1 billion as at end-2021, of which 39% comprised renewables and gas solutions.

With rising oil prices, the offshore drilling rig market has shown signs of improvement, and utilisation and dayrates for modern jackups are projected to rise even further over the next few years. With improving market conditions, Keppel is hopeful that Keppel O&M’s legacy rigs can be substantially monetised over the next three to five years.

Meanwhile, Keppel Infrastructure continued to contribute resiliently to the Group. Its net contribution[5] was S$103 million for FY 2021, compared to S$144 million for FY 2020, as the FY 2021 results included S$23 million of closure costs on interest rate swaps as part of the refinancing plan for an asset. During the year, Keppel Infrastructure announced several initiatives including exploring the import of renewable energy to Singapore, developing electric vehicle charging infrastructure, securing Singapore’s first Energy-as-a-Service contract, and studying the feasibility of developing an Asia-Pacific green ammonia supply chain.

 

Urban Development

The Urban Development segment’s net profit soared 74% to S$763 million for FY 2021, from S$438 million for FY 2020. Keppel Land’s net contribution[6] rose 88% to S$717 million, underpinned by higher contributions from property trading projects in China and Vietnam, as well as gains from its asset monetisation efforts. In 2021, Keppel Land completed the monetisation of eight projects with total proceeds of about S$1.9 billion and a net gain of over S$450 million[7]. During the year, Keppel Land sold about 4,870 homes, with a total sales value of S$4.0 billion, compared to 3,340 homes sold in 2020 with a total sales value of S$2.5 billion.

Meanwhile, the Sino-Singapore Tianjin Eco-City contributed a profit of S$14 million to the Group in 2021, due mainly to the sale of a commercial and residential land plot.

 

Connectivity

The Connectivity segment recorded a net profit of S$64 million for FY 2021, significantly higher than the S$13 million in FY 2020, supported by the monetisation of China logistics assets during the year.

Keppel Data Centres’ performance improved yoy, with losses narrowing to S$1 million in FY 2021 from S$12 million in FY 2020, supported by higher monetisation gains during the year. This does not include Keppel Data Centres’ share of profits from the Group’s data centre REIT and private funds, reported under Asset Management, which amounted to S$87 million in FY 2021. In line with the Group’s efforts to reduce the carbon footprint of data centres, Keppel Data Centres plans to commence the development of its innovative, energy-efficient floating data centre in Singapore in 2022, subject to regulatory approval.

M1 continued to contribute resiliently to the Group, registering a net profit of S$57 million for FY 2021, compared to S$65 million in FY 2020. Excluding COVID-19-related government grants in both years, M1’s net profit would have been S$7 million higher year-on-year. In 2021, M1 continued to have the second largest postpaid base in Singapore with over 1.7 million customers, and achieved 50% outdoor coverage in Singapore in its 5G Standalone network rollout. M1 is also growing its enterprise business and has embarked on regional expansion with the acquisition of Malaysian digital solutions provider, Glocomp System.

 

Asset Management

The Asset Management segment’s net profit grew 8% to S$301 million for FY 2021, underpinned by a 38% increase in Keppel Capital’s contribution[8] of S$117 million.

Keppel Capital’s assets under management grew 14% over the year to reach S$42 billion as at end-2021. Attesting to its growing track record as a leading manager of multi-asset classes bolstered by sustainable urbanisation trends, Keppel Capital’s asset management fees[9] grew by about 29% yoy to S$233 million in FY 2021. In FY 2021, Keppel Capital raised total equity of about S$3.5 billion and completed around S$5.5 billion in acquisitions and divestments.

 

[1] Envision AESC is one of the world's leading battery technology companies. Through AIoT-driven innovations in battery technology and multidisciplinary applications, Envision AESC establishes scenarios to enable electric vehicles to participate in the renewable energy eco-system, and provides a dynamic balance to promote common development of clean energy and new energy electric vehicle industry. In 2019, Keppel entered into an agreement with Envision AESC to invest US$50 million for a minority stake in Envision AESC Group Ltd. This co-investment is in line with Keppel’s strategy to expand its energy solutions with cleaner fuels sources and renewables in the deployment of innovative concepts and solutions for sustainable urbanisation.

[2] Excludes a S$269m share of Floatel’s restructuring gain.

[3] Excludes impairments made by Keppel O&M for its exposure to KrisEnergy.

[4] Op Co comprises Keppel O&M (excluding the legacy completed and uncompleted rigs and associated receivables) and its interests in Floatel and Dyna-Mac.

[5] Does not include contribution from the business trust.

[6] Does not include contributions from REITs, private funds and SSTEC.

[7] About S$380 million of the net gains were recognised in FY 2021, while the rest was recognised in FY 2020.

[8] Includes 100% contribution from the manager of Keppel DC REIT​.

[9] Includes 100% fees from subsidiary managers, joint ventures and associated entities, as well as share of fees based on a shareholding stake in an associate with which Keppel has strategic alliance.