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, 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.
Separately, Keppel also announced 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.