Keppel's net profit up 47% to $1.6b in the first nine months of 2012

ROE is healthy at 23.1%.

Here's more from the address by Mr Choo Chiau Beng, Chief Executive Officer of Keppel Corp:

Amidst this trying global environment, Keppel Corporation has, in the first nine months of 2012, posted a creditable performance. Our nine months net profit rose 47% from last year to $1.6 billion, in spite of a lower 3Q performance of $346 million, which declined 15% compared to the same period last year.

Our annualised ROE for the first nine months remained healthy at 23.1% while Economic Value-Added (EVA) increased from $770 million to over $1.2 billion.

We will continue to stay agile with a healthy balance sheet that will enable us to pursue the right opportunities to grow our businesses.

Sustainable growth opportunities
In Offshore & Marine, E&P spending remains buoyant, supported by sustained Brent oil prices of above US$100 per barrel. Oil companies have strong impetus to continue sanctioning projects. Recent discoveries in the North Sea, as well as deepwater Mexico and both coasts of Africa, have also fueled optimism for further exploration work.

On the supply side, recent years of demand growth coupled with the retirement of older rigs have tightened the market, lifting utilisation and day rates for newer and more advanced jackups and ultradeepwater units. However, with surplus capacity in shipbuilding, more yards are chasing after offshore work, and the aggressive competition continues to exert pressure on newbuild prices and margins.

In the third quarter, Keppel Offshore & Marine secured $7.3 billion in new orders across Brazil, Kazakhstan and Singapore. This brings our net orderbook to $13.1 billion as at end September with work extending to 2019. As I had emphasised in the first half of this year, we remain resolved in executing our backlog of projects well, while sharpening our technology edge at the same time.

We have embarked on a strategy to improve the competencies and productivity of our regional satellite yards to meet heavy workload requirements and more. The redoubling of productivity and R&D efforts will enable us to sustain growth and value creation for our stakeholders. It will also ensure that Keppel remains a competitive and compelling solutions partner to our customers over the long term.

In the Infrastructure Division, Keppel Energy is well positioned to meet the opportunities and challenges of a dynamic energy industry in Singapore with its 800-megawatt power plant expansion that will be operational in the first half of next year.

The outlook for Waste-to-Energy (WTE) solutions remains encouraging with expectations for the global market to grow to US$29.2 billion by 2022. Emerging markets are also more receptive to WTE solutions in a bid to address higher population growth, urbanisation and standards of living.

Keppel Integrated Engineering continues to build on its track record for WTE solutions and remains committed to completing its projects in the Middle East and Europe, including its latest waste-to-energy combined heat and power project in Bialystok, Poland.

Despite a decline in foreign exports, investments in infrastructure and domestic consumption continue to drive demand for high-quality, reliable logistics and distribution services in China. Keppel T&T is focusing on selected areas in China to tap on these opportunities. The development of its new Sanshan Port in Anhui and International Logistics Park in Jilin is progressing well.

In Property, Singapore’s new private home sales held up at 16,500 units in the first nine months, slightly higher than the same period last year. In spite of this, the outlook for the residential property market in Singapore remains uncertain with the introduction of more cooling measures. In China, new home prices saw a rebound over the third quarter of this year along with sales volumes, reflecting sustained demand from genuine homebuyers.

Singapore’s commercial sector has held up with lower vacancy rates and positive net absorption. Some occupiers have taken a flight to quality, riding on the relatively high availability of Grade A space at competitive rents. Looking ahead, rental decline for Grade A offices is expected to ease given the limited pipeline of new office space between now and the first half of 2013.

Low interest rates, good liquidity as well as increased urbanisation and capital flows in the Pan-Asian region provide solid fundamentals for our property fund management business. In the third quarter of this year, our fund management units grew their portfolios of assets with stakes in prime office developments in Australia and Singapore.

Moving ahead, our Property Division will continue to seek out and selectively acquire quality sites in Singapore and overseas for both residential and commercial developments. It will also tap into growth opportunities in the region prudently, whilst raising its reputation as a quality fund manager.