SINGAPORE (Dow Jones)–Keppel Corp. (BN4.SG) said Thursday first-quarter net profit more than doubled from a year earlier, mainly because of accounting changes which affect earnings recognition from its property sales while the conglomerate’s offshore and marine arm expects to seal rig contracts with Sete Brasil worth US$4.12 billion in the middle of the year.
The conglomerate–which has interests in property, engineering, infrastructure and power, as well as being the world’s largest builder of offshore oil rigs by output–reported a net profit of S$750.8 million for the January-to-March period compared with a restated S$311.5 million. The result was better than the S$378 million net profit expected in a Dow Jones poll of analysts. Revenue was up 86.4% at S$4.27 billion compared with a restated S$2.29 billion.
“Despite the mixed global outlook, the prospects for our key businesses remain good. The offshore and marine industry has continued to see good demand for new rigs in the first quarter,” Chief Executive Officer Choo Chiau Beng said in a statement.
“The lumpy performance in this first quarter is primarily because we started recognizing earnings from homes sold under the deferred-payment scheme at Reflections at Keppel Bay,” he said.
Because of accounting changes, profits from sales under the scheme at the Reflections development are now recognized only upon project completion. Profits for the company’s property segment grew to S$392.5 million in the quarter compared with S$48.8 million.
The company says its offshore and marine division continues to see good prospects, thanks to a projected increase in global exploration and production expenditure in the next few years. Offshore and marine posted net profit of S$235.3 million compared with S$215.8 million.
The division has secured S$688 million in new orders so far in 2011 and net order book stood at S$8.4 billion at the end of March with deliveries extending until 2015.
Those order values, however, do not include likely contracts which are expected to arise from a letter of intent that Keppel said last Thursday it had signed with Sete Brasil Participacoes SA, to design and build five semisubmersible drilling rigs of Keppel’s proprietary DSS 38E design.
If the orders are confirmed, the company said they will add a potential US$4.12 billion to the rig builder’s order book. Choo said that the orders “will likely be inked in the middle of the year.”
The pact comes after Keppel in December 2011 secured an order worth US$809 million from Sete Brasil for one DSS 38E semisubmersible rig.
Sete Brasil was established by seven Brazilian investors–including banks and pension funds, as well as Petroleo Brasileiro SA (PBR), or Petrobras–to charter drilling rigs for Brazil’s pre-salt oil exploration.
-By Matthew Allen, Dow Jones Newswires