Financial penalty, related costs push Keppel into the red

This article is more than 12 months old

The one-off financial penalty and related costs arising from the global resolution of Keppel Offshore & Marine (Keppel O&M)'s corruption scandal in Brazil has pushed the larger Keppel group into its first quarterly loss since 2013.

Keppel Corp sank into the red with a net loss of $495.8 million for the three months to Dec 31, reversing significantly from a net profit of $143.1 million in the same period a year earlier.

The plunge was largely the result of a hefty $619 million charge relating to Keppel O&M's cross-border settlement with criminal authorities in the United States, Brazil and Singapore over corrupt payments made by a former agent in Brazil.

This sum included Keppel O&M's US$422.2 million (S$567 million) in fines, together with related costs. Excluding the one-off charge, net profit would have come in at $124 million, 13 per cent lower than previously.

Keppel said yesterday the weaker quarterly showing was also due to poorer operating results from its offshore and marine division, although partially offset by higher profits from Singapore property trading and fair value gains from assets.

Revenue dropped 20.4 per cent to $1.54 billion, as turnover fell across all divisions except infrastructure. The group registered losses per share of 27.3 cents for the quarter.

Net asset value per share stood at $6.29 as at Dec 31, down from $6.42 as at the same time the year before.

For the full year ended Dec 31, net profit tumbled 72.4 per cent to $216.7 million, while revenue fell 11.9 per cent to $5.96 billion.

The property business accounted for the lion's share of Keppel's earnings with a net profit of $685 million, up from $620 million a year ago.

In contrast, Keppel O&M incurred a loss of $835 million compared to a net profit of $29 million previously, in light of the financial penalty and an additional provision of $81 million for losses made on the Sete Brasil projects and $54 million in impairment on other assets.

Keppel has proposed a final cash dividend of 14 cents for the fiscal year 2017.