How Choo Chiau Beng shaped Keppel for the future

How Choo shaped Keppel for the future

Outgoing CEO reflects on his five-year tenure – one of the group’s most profitable periods in its 45-year history

Lisa Lee lisalcc@sph.com.sg

MR CHOO
‘As the boss, when I see that something is not fair, I will voice it, so that people are fairly treated. So I think the key is to win the hearts and minds of the people. If you have that, then you have no problems.’ – PHOTO: ARTHUR LEE

‘As CEO of a multi-business company, one of the important skill sets you need to have is to know how to allocate capital and resources to your different businesses. So we looked at (incoming CEO) Loh Chin Hua . . .  When we wanted to start a property fund, we invited him to do it for us.’
– Choo Chiau Beng, CEO, Keppel Corp

Singapore

AS Keppel’s group CEO Choo Chiau Beng hands over the baton to a new team over the next few weeks, it will be after a fairly short five years as head honcho – during which the group has experienced one of its most profitable periods in its 45-year history.Even as he takes on his next role as senior adviser to the new team, Mr Choo is confident that Keppel remains in good hands, even though the new CEO has had a decidedly shorter history with the firm and, in the case of its newly appointed CFO, none at all.

After an eventful 42 years with the group – spanning his entire working career, no less – Mr Choo appears sanguine about its prospects.

The multi-dimensional businesses that make up the Keppel group require a breadth of knowledge and experience which CEO-designate Loh Chin Hua and CFO-designate Chan Hon Chew bring to the table, he explained.

“When I became CEO of Keppel Corp on Jan 1, 2009, I had just celebrated my 61st birthday. Of course, 62 (years) is the age of official retirement and however long you extend it, or whatever you want to do, the runway is quite short. I knew one of my important tasks was to get a successor ready,” he told The Business Times in a recent exclusive interview.

He said: “Keppel as a whole, as a multi-business company, is far from straightforward. My advantage, of course, was having been at the group for so long. I had been director of Keppel Offshore & Marine (KOM) since 1983, and MD and chairman of Keppel FELS in 1983. I had many years in the group, I was a member of the executive committee since Sim Kee Boon became executive chairman in 1983. So I had a lot of understanding of what’s going on in the group.

“My successor will not have that luxury. If we look at people at KOM, they’ve been largely at KOM and are very focused. Whether offshore or marine, they know ship repair, shipbuilding or rig-building, but they are not exposed to the other businesses. The people at property are also not exposed to the shipyard business, so they have not much understanding of the shipyard business.”

As a conglomerate, Keppel’s three core businesses in offshore & marine (O&M), property and infrastructure account for 61 per cent, 26 per cent and 9 per cent respectively of the group’s latest nine-month FY2013 net profit of $1.16 billion. Analysts are projecting an FY2013 and FY2014 net profit of $1.51 billion and $1.63 billion respectively, driven by a robust O&M order book and ongoing property projects.

While the group’s annual net profit had already crossed the $1 billion mark in FY2008 on Mr Choo’s watch as group CEO, net profit grew 20 per cent on average over the next four years to hit a record $2.2 billion in FY2012. Besides robust organic growth at its offshore & marine and firm property income, exceptional gains from the sale of its investment in SPC (Singapore Petroleum Company) in FY2009, the listing of assets in K-Green Trust and K-Reit, and contributions from its old shipyard-turned-lucrative property project Reflections@Keppel Bay also helped.

“As CEO of a multi-business company, one of the important skill sets you need to have is to know how to allocate capital and resources to your different businesses. So we looked at Loh Chin Hua. He was the founder and head of Alpha property fund at Keppel Land in 2002. At that time, when we wanted to start a property fund, we invited him to do it for us. He was running Prudential’s portfolio then and he had also spent 12 years at GIC.”

Once Mr Loh agreed to take on the role, he went through an immersion period at the yards. Last year, he took over as CFO of the group. Following his promotion to CEO, Keppel announced the appointment of Mr Chan as the new CFO.

“We were looking for a CFO internally. The board felt that someone who had CFO experience in a listed company would be good for Keppel. So we were very fortunate to get Chan Hon Chew, who after several years at SIA (as SIA’s senior vice-president for finance) felt that he needed to grow beyond SIA. He is still quite young. He has some property experience during his time at Wing Tai before.”

Finding a successor for its offshore & marine division CEO Tong Chong Heong, who will step down at the same time as Mr Choo, required a look across the oceans. Chow Yew Yuen was persuaded to return after years of running Keppel’s US operations.

Mr Choo believes that the group’s O&M division should maintain its position as a leading global rigbuilder amid increased competition, particularly from the Chinese yards.

“We have a value proposition to customers to be reliable – in quality, in price, in delivery. The Chinese yards have not been able to do this yet. We develop our own design, and invest in R&D and new technology to be ahead.”

Also, “we are not just Singapore yards; we are yards in many countries, near markets, near customers. Singapore is an important part of our business, the intellectual hub and management hub. But we are a global business in many ways. In fact, today we employ more people overseas than in Singapore. Out of our 42,000 workforce, we employ 20,000 in Singapore; the rest are overseas”, he added.

Again on the group’s overseas strategy, he said: “Keppel will be missed if we are not there. We believe that our corporate responsibility is to enhance the community where we operate. We must be a valued partner, a member of the community. Any organisation that thinks they can make money from a community and not give back will have a very short stay as guests.”

With Temasek being a constant key shareholder at 21 per cent, he added that “Temasek is stabilising; we like long-term shareholders. We have also been creating a lot of value for them. They have been supportive as a long-term shareholder.”

Mr Choo also seems to relish having fellow shipyard Semb- corp Marine bidding side by side often for the same contracts from similar customers. “So far, there is room for two big shipyards in Singapore. We have been sparring all the time. Look at the two female tennis champions in Belgium (referring to Kim Clijsters and Justine Henin-Hardenne). By having two competitive players – and Belgium is not known for tennis – you have two world champions. So sparring is important.”

Sparring with its competitors may have helped shape Keppel’s culture of excellence, but staying loyal to the company is probably what Mr Choo best exemplifies.

“To be very frank, when I was very young, I needed money to buy my first home and the company helped me. I will never forget that and I’ve never entertained the thought of joining anybody else; there was no need.

“If I can find fulfilment in my company, why would I need to look somewhere else? It’s only when something is lacking, or you feel you are not fairly treated.

“The culture in Keppel is never to go to your boss for more pay or more bonus; you never ask. But as the boss, when I see that something is not fair, I will voice it, so that people are fairly treated. So I think the key is to win the hearts and minds of the people. If you have that, then you have no problems.”