The world's largest oil rig maker announced this evening that net profit for the three months ended Dec 31 fell 22 per cent to $305 million. The profit just about trumped the average forecast of $301 million from a Reuters poll of five analysts.
Read Keppel Corp CEO Choo Chiau Beng's full statement below:
I am pleased to announce that Keppel Corporation has achieved another creditable year in 2012. Excluding revaluations, our net profit grew by 28% to a high of S$1.9 billion. Our Return on Equity remained healthy at 22.6%. Economic Value Added also grew to about S$1.4 billion for the year.
The Board of Directors will be recommending a total distribution of 72.4 cents per share to shareholders for the whole year. This comprises the interim dividend of 18 cents per share, a proposed final dividend of 27 cents per share, and a proposed dividend in specie of Keppel REIT units equivalent to 27.4 cents.
Challenging Global Terrain
2012 was a difficult year as the global economy was fraught with uncertainties. At the start of 2013, the US managed to stave off a fiscal cliff with interim measures but growth prospects will remain sluggish.
Over in the EU, efforts made were not enough to pull economies out of the mire. The unresolved Eurozone crisis will continue to cast a shadow over 2013.
From the modest improvements in the fourth quarter, Singapore avoided a recession and is expected to record a 1.2 percent GDP growth for the whole of 2012.
Meanwhile, China and most of Asia were affected by weak export demand from the EU and US. For the most of 2012, Brent crude hovered above US$100 a barrel.
2013 is expected to be an extension of previous years, laden with uncertainties and potential risks. However, in navigating such an environment, there will also be opportunities ripe for acquisitions.
This year, Keppel Corporation celebrates 45 years of growth. We have laid firm foundations that have allowed us to deliver creditable results year on year, as well as emerge stronger through every challenge. Against the strong headwinds, we will remain resilient and agile, as we have been over four decades.
Shaping the Future
Offshore & Marine
Staying focused on niche segments of the Offshore & Marine industry has allowed us to pursue our Near Market Near Customer strategy, and define our edge in areas where we choose to compete.
Our core strengths - a global network of 20 yards, robust technology and execution competencies - have propelled the Group's growth in the last decade, as we continue to reap the rewards of our investments.
For the whole of 2012, Keppel Offshore & Marine secured S$10 billion in contracts from customers across Brazil, the Caspian Sea and Mexico. This brings our net orderbook to $12.8 billion as at end December 2012, with visibility into 2019.
In 2013, we will be completing a record of 22 newbuild units, which we aim to deliver on time, on budget and safely to our customers.
The world's swelling demand for energy continues to drive E&P into new frontiers which are deeper and harsher. Political agenda and the pressure to develop have also nudged governments of emerging countries to quickly exploit their own oil and gas resources.
Stable Brent crude prices of above US$100 per barrel, continue to support industry capex for sizeable discoveries in Gulf of Mexico, the North Sea, Brazil and Africa. Scaling new frontiers requires highly advanced solutions; therefore, we expect global E&P spending to rise further.
Meanwhile, keen rivalry from Chinese and Korean yards have suppressed prices and squeezed margins on newbuilds.
At Keppel, we will continue to distance ourselves from the competition. We will secure our stronghold in both key and emerging oil and gas markets, as well as further improve the skills and productivity of all our yards.
Our Asian network of yards across the Philippines, Indonesia and China has been assisting the Singapore yards with offshore work. I am happy that some of them have garnered the confidence of international operators and drillers.
Keppel Subic Shipyard, for instance, was recently engaged by Shell to build a Depletion Compression Platform that will support the recovery of natural gas from the Malampaya gas field in the Philippines. This adds to the yard's growing offshore track record, which includes drillship upgrading and other conversion work.
Contracts like these are the fruition of sustained investments to equip our satellite yards for bigger offshore contracts. Such efforts will help to ease the foreign labour constraint that we are facing in Singapore.
To fortify our leadership position, we will also continue to partner trend-setting customers to innovate solutions for new offshore frontiers, and sharpen our technology know-how. The Front-End Engineering and Design study that we are doing for Golar's FLNG projects is a good example of our holistic partnership with customers from start to finish.
Within our Infrastructure Division, we have chosen to offer sustainable solutions for power generation, environmental engineering and business connectivity. We are mindful in selecting only projects that are value-enhancing.
Keppel Energy has done well in keeping up the efficiency of its power plant operations on Jurong Island. The 800-megawatt expansion is on-track for completion by mid-2013, and will soon add to the Group's recurring income stream.
Keppel Integrated Engineering (KIE) is focused on executing and delivering its UK project despite challenges. During the year, it also commenced work on a new Waste-to-Energy combined heat and power project in Poland, and expanded its district cooling capacities in Singapore.
Meanwhile, Keppel T&T has been growing its logistics business. In 2012, it started work on the Jilin Logistics Park and Food Zone, and embarked on its second logistics hub in Anhui. It also expanded into Indonesia to provide services for the local consumer and retail goods sector.
Maintaining its growth momentum in data centres, the company acquired two more facilities in the UK and Malaysia respectively. In addition, it is investing another US$50m as part of the Securus Data Property Fund's second round capital raising. This will make Keppel T&T the single largest shareholder of the Fund.
Urbanisation along with infrastructure development will continue to be a major growth driver for most emerging economies. Still in early stages, our infrastructure businesses are deepening their roots, and will focus on honing expertise, efficiency and execution in scalable businesses.
In the Property Division, Keppel Land sold 2,350 homes across the region, leveraging its quality track record and experience. Notably, homes sold at Reflections at Keppel Bay strongly boosted our property profits for the year.
The company continued to grow its land bank selectively, adding four quality residential sites in China, Singapore and Sri Lanka. It also strengthened its commercial portfolio, and embarked on four office and mixed-use developments in China, Indonesia and Vietnam.
Meanwhile, Keppel REIT and Alpha Investment Partners' combined assets under management grew to S$15.3 billion.
Urbanisation trends and low interest rates are driving strong demand for quality homes and office spaces in Asia. Singapore hit a record high of 21,600 homes sold last year. New private home prices were also lifted by robust demand for mass market homes in suburban areas.
Earlier this month, the government announced its seventh wave of cooling measures. This, coupled with the risky global economy, and a fairly big supply of newly completed units, is likely to depress the market.
Meanwhile, Singapore's office market was resilient with a deceleration in Grade A office rental corrections, and low vacancy levels especially in Marina Bay. The sector's outlook remains encouraging with Singapore's growing attraction to financial institutions and regional head offices.
In China, residential volumes and prices have also recovered slightly. The new Chinese leaders are expected to maintain a tight rein over property speculation and prices, balancing cooling measures with economic growth.
The global uncertainties remain the biggest risk to Asia Pacific's property sector. However, given the region's rising urbanisation and wealth, industry fundamentals remain positive in the mid to long term. Improved liquidity and availability of low financing options will also support growing office values in the region.
Moving forward, we will leverage our regional presence, and Keppel's brand value to acquire good sites and grow our assets. Keppel Land has built up a strong balance sheet with low gearing, which will enable it to seize the right opportunities at the right time.
We will also harness our expertise in developing and managing homes, offices and mixed-use properties to enhance our value proposition, as well as further improve the quality and performance of our assets.
In shaping Keppel's future, we will continue to strengthen our core and harness human, knowledge and financial capital. We have to invest further in our human capital and increase our bench strengths in core disciplines. We will continue to invest in sustaining a safe work environment for our people.
We will give more responsibilities to the young and able, grooming them to grow and take over leadership roles in the Group.
Last year, Teo Soon Hoe passed his role as CFO smoothly to Loh Chin Hua. Chow Yew Yuen was promoted as Keppel O&M's Chief Operating Officer, while Michael Chia and Wong Kok Seng were respectively made Managing Directors of its Marine and Offshore divisions. Chor How Jat was promoted to Managing Director of Keppel Shipyard. At the start of this year, Ang Wee Gee was appointed as CEO of Keppel Land following Kevin Wong's departure.
With these key positions anchored by experienced people embracing Keppel core values, I am confident that the Group will continue creating sustainable value for our shareholders.
Now, I shall let Chin Hua take you through a review of the Group's full-year financial performance. Thank you.