Keppel Corp has posted a net loss of $697.6 million for the second quarter ended June, reversing a $153.1 million net profit a year ago. The company was hit by $919 million in provisions for Keppel Offshore & Marine's contract assets, doubtful debt, as well as share of impairment provision arising from its associate, Floatel.
Without the impairments, Keppel would have had a net profit of $222 million for the quarter, up 45 per cent from a year ago. The company's quarterly revenue stood at $1.33 billion, down 25.7 per cent from a year ago. Contributions fell across all business divisions due to measures to contain the spread of the coronavirus.
Keppel yesterday declared an interim dividend of 3 cents per share, down from the 8 cents it had declared for the same period a year ago. This will paid on Aug 20.
Chief executive Loh Chin Hua said that Keppel has failed to meet a pre-condition to a $4 billion takeover offer from Temasek Holdings. "We believe that the 20 per cent threshold in the MAC (material adverse change) clause in respect of net profit after tax has been crossed, which means that the MAC pre-condition in Temasek's pre-conditional partial offer has not been satisfied."
MAC clauses can be invoked to end or renegotiate deals, particularly if events occur that are detrimental to the target company.
Last October, Temasek, which already owns about one-fifth of Keppel, offered to buy an additional 30.6 per cent stake.
Still, the deal has a long-stop date of Oct 21, meaning Keppel could make up any shortfall in its third-quarter results, while Temasek also has the right to waive its pre-conditions.
For the first half of its financial year, Keppel's net loss amounted to $537 million, with the company hit by $930 million of impairments from the offshore & marine division. Excluding the impairments, it would have registered a net profit of $393 million for the first six months of the year, 5 per cent higher than a year ago.
Revenue stood at $3.18 billion, down 4 per cent from a year ago. This was due mainly to lower contributions from property trading projects in China, power and gas sales, environmental engineering projects and asset management.
The offshore & marine division reported a net loss of $959 million, reversing the net profit of $10 million a year ago. Besides the impairments, Keppel's O&M Singapore workforce was reduced to about 1,200 persons for most of the second quarter, from about 24,000 in March. The workforce has since risen to about 5,000. As at end-June, the net orderbook stood at $3.5 billion, which is expected to last the offshore & marine division for at least two years.
Mr Loh said that most of the company's businesses have remained resilient, underpinned by the essential services that they provide.
THE BUSINESS TIMES, REUTERS