Keppel Corp says 1Q net profit up 8%, rig orders rebound: Update

Keppel Corp (KPLM.SI), the world’s largest rig-builder, reported a better-than-expected 7.8% rise in quarterly net profit on Wednesday, helped by better margins from its offshore and marine business, while new orders for oil rigs rebounded.

The conglomerate, whose interests span from offshore and marine engineering to property and infrastructure, said it secured $4.5 billion worth of new offshore and marine orders in the first quarter, more than the total orders secured in 2010.

Keppel and rival Sembcorp Marine (SCMN.SI), the world’s two top rig builders, have seen a recovery in new orders from energy companies that are accelerating exploration due to high oil prices. The rebound comes after new orders slowed in the last two years, hurt by a global recession in 2009.

“The returning market confidence in the offshore and marine industry has translated into a strong flow of orders in the first quarter,” Keppel’s chief executive Choo Chiau Beng said in a statement.

“Our Offshore & Marine Division secured $4.5 billion worth of new orders in the first quarter. Since then, in the first weeks of April, we have secured a few more contracts, bringing the total of new orders secured year to date to $5 billion.”

However revenues from these orders will come in only later as the company’s total orderbook of $7.5 billion includes deliveries as late as 2014.

The offshore and marine business recorded a 3% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) in the first quarter despite a 20% fall in the segment’s revenue, resulting a better EBITDA margin of 23.4% compared to 18.3% a year ago.

Keppel, in which Singapore state investor Temasek Holdings has around a 20% stake, recorded a net profit of $346.2 million in the quarter ended March, up from a revised $321.3 million. The net profit was above an average forecast of $302 million from analysts.

Its property unit, Keppel Land (KLAN.SI), which reported a 45.5% rise in its quarterly net profit, had also helped the earnings of the parent company, which has a market capitalisation of $16 billion.

Keppel’s shares have risen by more than 12% since the start of the year, relatively in line with 10% increase in shares of Sembcorp Marine, but both outperformed the 0.8% fall in the broader Singapore index.