Keppel Corporation Limited (SGX: BN4) had a busy year in 2021.
The blue-chip conglomerate announced that it was restructuring its offshore and marine division as part of a strategic review.
The move was in line with its Vision 2030 goals that were unveiled in May 2020.
In addition, the group was also active on the acquisitions front.
Keppel Corporation has offered S$2.351 per share to purchase Singapore Press Holdings Ltd (SGX: T39) and is also exploring a potential combination with Sembcorp Marine Ltd (SGX: S51).
The company’s transformation efforts have borne fruit.
Keppel Corporation announced its fiscal 2021 (FY2021) earnings yesterday and reported a strong turnaround.
Here are seven things that investors need to know about the group’s results.
1. Net profit at 6-year high
For FY2021, Keppel’s revenue jumped by 31% year on year to S$8.6 billion while operating profit soared from just S$8 million a year ago to S$898 million.
The better top-line performance was driven by broad-based year on year increases in revenue across all its four divisions.
Net profit clocked in at S$1 billion, reversing a net loss of S$506 million last year.
This is also the first time since fiscal 2015 that net profit had surpassed the S$1 billion mark.
2. Less red ink for O&M sub-division
Keppel’s Energy and Environment division, which includes its offshore and marine (O&M) division, enjoyed a year on year revenue uplift of 41% to S$5.6 billion.
Although the O&M division reported a net loss of S$414 million, it was a significant improvement from the S$1.2 billion loss in FY2020.
Notably, this net loss included a S$318 million non-cash impairment charge related to KrisEnergy.
Stripping this out, net loss would have been just S$96 million.
The division also snagged new orders worth S$3.5 billion in FY2021, bringing its order book at end-2021 to S$5.1 billion, up 55% year on year from end-2020’s S$3.3 billion.
3. Growing its connectivity segment
Keppel’s connectivity segment, which includes its Keppel Telecommunication and Transportation arm and telco M1, reported that revenue inched up by 3% year on year to S$1.26 billion.
Net profit, however, surged by nearly five-fold year on year to S$64 million.
Subsidiary M1 grew its revenue slightly to S$1.1 billion and increased its postpaid customer base by 6% year on year to 1.7 million.
The division also monetised M1’s network assets by selling them to Keppel DC REIT (SGX: AJBU), unlocking proceeds of S$580 million.
4. Boosting its asset management arm
Keppel Capital, the group’s asset management arm, raised a total of S$3.5 billion in equity last year, bringing its assets under management up 14% year on year to S$42 billion as of end-2021.
The division reported a 20% year on year jump in revenue to S$162 million while net profit inched up 8% year on year to S$301 million.
Around S$5.5 billion worth of acquisitions and divestments were completed in FY2021.
The group also increased its recurring income from asset management fees to S$233 million, up around 29% year on year.
5. A focus on asset monetisation
As part of its Vision 2030 objectives, Keppel announced asset monetisations worth S$2.9 billion since October 2020.
The capital released will be used to fund organic and inorganic growth initiatives, with part of it set aside to reward shareholders.
Keppel is on track to meet its target of S$5 billion worth of monetisations by the end-2023 and will make this a key feature of the group moving forward.
6. A tripling of its final dividend
In line with the strong results, the group declared a final dividend of S$0.21, triple of what it paid out a year ago.
FY2021 dividend stands at S$0.33 per share, more than triple the S$0.10 that was paid out in FY2020.
At Keppel’s latest share price of S$5.29, the historical dividend yield stands at 6.2%.
7. Initiating a share buyback programme
Meanwhile, Keppel also separately announced a S$500 million share buyback programme.
The programme allows the group to purchase shares when it deems them undervalued due to market conditions.
Shares repurchased will be held as treasury shares that may be used for employee share plans or as currency for future acquisitions.
Get Smart: A vast improvement in fortunes
Based on its latest report, Keppel has successfully engineered a turnaround in its fortunes.
Not only has the O&M conglomerate reduced its losses from its legacy oil and gas business, but it has also advanced its asset monetisation initiatives and unlocked capital for shareholders.
2022 should be an exciting year for the group as it embarks on the next stage of its transformation.
Investors may see further improvements for all its divisions as the economic recovery gathers momentum.
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Disclaimer: Royston Yang owns shares of Keppel DC REIT.
