Keppel Corp FY profit plunges 72% on unit's Brazil bribery fine

Keppel Logo.

Singaporean conglomerate Keppel Corp reported a 72 percent plunge in full-year profit, hurt by a penalty of S$619 million on its unit Keppel Offshore & Marine.

Group's net profit fell to S$217 million in the full year ended December 31 compared to S$784 million last year.

Revenue declined 12 percent to about S$6 billion, the company said in a regulatory filing on Thursday.

"The global resolution reached by Keppel O&M brings to an end what has been a painful chapter for Keppel. We have put in place effective compliance controls to ensure that this does not happen again," Loh Chin Hua, CEO of Keppel Corp said in a statement.

"With the issue now behind us, we look forward to continuing on our growth trajectory and building a more disciplined and sustainable business - a Keppel that will remain trusted and admired by all our stakeholders."

The U.S Department of Justice, in December last year, imposed the fine on Keppel O&M due to the company's involvement in a scheme to pay bribes to Petrobras officials and the then governing political party in Brazil, the Workers Party of Brazil between 2001 to 2014.

Keppel said it undertook a thorough internal investigation and identified certain suspicious transactions involving Keppel O&M's former agent in Brazil, Zwi Skornicki.

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The Offshore & Marine Division incurred a net loss of S$835 million for in the fiscal 2017, compared to a net profit of S$29 million an year earlier.

This was mainly due to the one-off financial penalty and related costs, lower revenue, provision for losses on the Sete Brasil rig contracts, impairment charges and a lower share of associated companies' profits, the company said.

Offshore and marine division helps design and build high-performance mobile offshore rigs. It also repairs, converts and upgrades a diverse range of vessels. The business contributes nearly 30 percent to the group revenue.

Shares in Keppel Corp ended down 0.6 percent to S$8.58 on the Singapore Exchange.

This article was first published on January 25, 2018