Keppel Corp’s Strong H1 2025 Earnings and Strategic Moves

Keppel Corporation Limited ((KPELY)) has held its Q2 earnings call. Read on for the main highlights of the call.

Keppel Corporation Limited’s recent earnings call for the first half of 2025 painted a picture of robust financial health, marked by impressive growth in net profit and strategic asset monetization. The company celebrated notable achievements, such as a strategic partnership with the Asian Infrastructure Investment Bank (AIIB) and significant cost savings. However, challenges persist, particularly in the non-core portfolio and the competitive telco market impacting the Connectivity segment.

Strong Financial Performance

Keppel Corporation reported a remarkable 25% year-on-year surge in net profit, reaching $431 million for the New Keppel. This growth was primarily driven by strong infrastructure earnings and improved contributions from the real estate sector. Overall, the company’s net profit for the first half of 2025 rose by 24% year-on-year to $378 million, showcasing its financial resilience.

Asset Monetisation Progress

The company made significant strides in asset monetization, announcing $915 million in divestments year-to-date. This brings the total asset monetization to an impressive $7.8 billion since October 2020. Key contributions came from real estate assets and investments in India and Vietnam, underscoring Keppel’s strategic focus on optimizing its asset portfolio.

Infrastructure Division Growth

Keppel’s Infrastructure division demonstrated solid growth, with net profit rising by 8% year-on-year to $333 million. Despite facing softer spark spreads, the division’s EBITDA grew by 7% to $405 million, reflecting its operational efficiency and resilience in challenging market conditions.

Significant Cost Savings

Through Project Lean, Keppel achieved $88 million in recurring annual run-rate cost savings, marking a significant step towards its target of $120 million per annum by the end of 2026. This initiative highlights the company’s commitment to enhancing operational efficiency and cost management.

Strategic Partnerships and Rankings

Keppel’s strategic partnership with the AIIB is set to mobilize up to USD 1.5 billion for infrastructure projects, reinforcing its position as a leading player in the sector. The company was also ranked as the fourth largest infrastructure manager in Asia Pacific and 23rd globally by assets under management, showcasing its industry prominence.

Asset Management Fee Growth

In the first half of 2025, Keppel recorded $195 million in asset management fees and successfully raised approximately $1.9 billion in equity. This growth in asset management fees underscores the company’s ability to leverage its expertise in managing assets effectively.

Non-Core Portfolio Losses

The non-core portfolio faced challenges, incurring a net loss of $53 million in the first half of 2025, compared to a net loss of $41 million in the same period of the previous year. This highlights the ongoing difficulties in managing non-core assets and the need for strategic adjustments.

Connectivity Segment Profit Decline

The Connectivity segment experienced a decline in net profit, dropping to $57 million, a 19% decrease from $70 million in the first half of 2024. This decline reflects the competitive pressures in the telco market, which continue to impact the segment’s profitability.

Challenges in Telco Market

The telco market in Singapore remains highly competitive, with a decline in consumer numbers and pressure on Average Revenue Per User (ARPU) levels. These challenges underscore the need for strategic initiatives to maintain competitiveness and profitability in this segment.

Forward-Looking Guidance

Looking ahead, Keppel Corporation provided extensive guidance on its financial performance and strategic outlook. The company anticipates a continued increase in net profit, with a 25% year-on-year rise to $431 million for the New Keppel. The funds under management reached $91 billion by June 2025, and the company is progressing towards its asset monetization target of $7.8 billion. Keppel also announced a $500 million share buyback program and is negotiating over $500 million worth of real estate and connectivity asset monetization transactions to be finalized by year-end.

In conclusion, Keppel Corporation’s earnings call for the first half of 2025 highlighted a strong financial performance, driven by strategic asset monetization and infrastructure growth. While challenges remain in the non-core portfolio and telco market, the company’s forward-looking guidance and strategic initiatives position it well for continued success. Investors and stakeholders can take confidence in Keppel’s robust financial health and strategic direction.