Keppel Q3 Profit Falls

Singaporean conglomerate Keppel Corp on Thursday posted a 15 percent fall in third-quarter net profit, hurt by lower contributions from its investments and property divisions.

Keppel, whose businesses range from rig-building to property development, posted a net profit of S$226 million ($164 million) for the quarter ended September, versus S$265 million a year earlier.

Total revenue for the quarter stood at S$1.3 billion, a 20 percent fall from a year earlier.

Higher revenue recognition from ongoing offshore and marine projects and increased power and gas sales were offset by lower contributions from property trading, asset management, as well as the absence of the sale of investments, the company said in a statement.

Revenue from the O&M division, which builds drilling rigs and support vessels, increased 9 percent to S$416 million. Property division revenue plummeted 67 percent to S$180 million due mainly to lower revenue from Singapore, China and Vietnam property trading.

Keppel said its O&M order book stood at S$4.4 billion at end-September, excluding orders from Sete Brasil Participacoes SA, a Brazilian client that filed for bankruptcy protection.

Last month, Keppel teamed up with Singapore Press Holdings for an offer to buy the remaining shares they don't own in telecom operator M1 Ltd, in a deal worth up to about S$1.27 billion.

"Incorporating M1's capabilities and 2 million recurring subscribers in a combined digital platform would provide opportunities for synergies and cross selling of services," Loh Chin Hua, Keppel's CEO, said in prepared remarks on Thursday.

He said the deal will expand Keppel's earnings streams and base of recurring income.

Loh said Keppel would also explore balance sheet optimization initiatives with M1 to unlock value from its underlying infrastructure, for example by restructuring infrastructure assets.

"We see this as an enabler to encourage sharing of infrastructure assets with other operators, which can also result in further cost reduction," he said.

($1 = 1.3773 Singapore dollars)

(Reporting by Aradhana Aravindan; Editing by Vyas Mohan and Gopakumar Warrier)

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