Keppel Corp's net profit slumps 65.4% to $151.2m in Q4

It took a hit from impairments and provisions.

Keppel Corporation posted a weaker than expected results for 4Q16, with net profits declining 65.4% to $151.2m.

According to OCBC Investment Research, there were lower contributions from O&M and provisions for impairment of $336m in 2016. Excluding revaluations, impairments, divestments and major provisions, net profit was $300m in 4Q16, comparable with that of 4Q15.

"In 4Q16, KEP incurred impairments of $87.4m for fixed assets and $120.8m for investments and associated companies. There were also provisions of $81.2m for stocks and work-in- progress, and $11.6m for doubtful debts. In 2016, the O&M division saw impairments of $277m; about $270m was incurred in 4Q16, resulting in net profit of $29m for FY16. With the tough operating environment, apart from reducing variable costs, KEP has also cut its overheads, achieving cost savings of about S$150m year-on-year," OCBC said.

On the other hand, OCBC said 2016 was a good year for the property division, with a net profit of $620m.

"Keppel Land reported higher net profit of $586m compared to S$564m in 2015. About 5,720 homes (+25% compared to 2015) were sold in 2016, comprising 3,800 in China, 1,520 in Vietnam and 380 in Singapore. Looking ahead, the group still expects healthy sales figures for China and Vietnam," the brokerage firm explained.