DESPITE a 24.6 per cent year-on-year fall in revenue to $2.42 billion, Keppel Corp achieved a 24.6 per cent rise in operating profit to $444.6 million for the second quarter ended June 30, 2010.
But net profit attributable to shareholders dropped 53 per cent year on year to $347.3 million in the absence of a $422 million one-time gain in Q2 2009 contributed principally by the disposal of Singapore Petroleum Company (SPC).
Including the exceptional profit of $422 million, Q2 2009's net profit attributable to shareholders was $739.5 million.
On a pre-exceptional basis, net profit attributable to shareholders rose 9.4 per cent year on year to $347.3 million.
Earings per share (EPS), after exceptionals, for the period fell 53.2 per cent to 21.7 cents, from 46.4 cents a year earlier. If last year's one-time gain was excluded, its EPS would have risen 9 per cent to 21. 7 cents.
The rise in operating profit was helped by a 65.2 per cent fall in 'other operating expenses' to $50.2 million. 'This was mainly due to lower fair value loss on investments and lower foreign exchange loss,' said Keppel. Materials and subcontract costs dropped 31.9 per cent to $1.57 billion.
For the first half of this year, the conglomerate's net profit attributable to shareholders, after exceptionals, fell 34.7 per cent to $669.3 million, while sales dropped 20.9 per cent to $4.9 billion. Before exceptionals, net profit climbed 11.1 per cent to $699.3 million.
Last year, rig builders such as Keppel were hard hit by the global recession. BP's recent oil spill in the Gulf of Mexico also continues to hamper the sector's recovery.
'The Gulf of Mexico oil spill has understandably caused some industry players to adopt a wait-and-see attitude on new rig orders and this has in turn impacted our orderbook,' said Keppel CEO Choo Chiau Beng.
Keppel derives 67 per cent of its net income from its offshore and marine businesses. This division secured $1.9 billion in new orders to date, bringing its net order book to $5 billion at the end of June.
Mr Choo said the company has submitted several bids for rig tenders by Brazil's national oil company and he hopes to secure a share of these orders.
Net profit from its offshore and marine division stood at $447 million in H1, 14 per cent higher than last year due to improved operating margins and higher interest income.
The star performer in the first half was Keppel's property unit with its net income up 119 per cent at $173 million. This was credited to higher contributions from associates that are developing the Marina Bay suites in Singapore as well as trading projects.
Half-year net profit at the group's infrastructure unit fell 30 per cent to $39 billion as the improvement at Keppel Energy failed to cushion the decline in contributions from EPC (Engineering, Procurement and Construction) contracts in Qatar.
'Profit from investments was lower due to the disposal of SPC in June 2009,' Keppel added.
Looking ahead, the company is confident that Gulf of Mexico spill will prove to be a temporary setback for the offshore oil and gas industry. In fact, stricter regulations that may be introduced following the incident could spur the replacement of aging oil rigs, it said.
Keppel added it has seen encouraging home sales in Singapore, China, Vietnam, Indonesia and India and it will 'continue to time' new residential launches to meet the demands of home owners.
It declared an interim dividend of 16 cents per share, up from 15 cents last year. Its shares climbed one cent to close at $8.85 before its earnings were released.