SINGAPORE (July 19): Keppel Telecommunications & Transportation (Keppel T&T) has reported earnings of $10.3 million for the quarter ended June, down by 45.3% from $18.8 million a year ago.

This brings earnings for the first half of FY2017 to $21.9 million, a 32% decline from $32.1 million in 1H16.

Revenue for 2Q fell 5.1% to $47.6 million from $50.2 million previously, mainly due to weaker revenue from logistics division, as well as the disposal of Keppel T&T’s 90% interest in Keppel DC Singapore 3 in Jan 2017 and 50% interest in Keppel DC REIT Management in Jul 2016.

Operating profit fell by 71% to $2.4 million from $8.3 million in the same quarter a year ago.

According to the group, this was largely attributable to the absence of contribution from subsidiaries disposed; higher start-up expenses and manpower employed to support new developments in the data centre business; and lower contribution from logistics operations.

Due to the lower operating profit, profit before taxation for the quarter declined by 35% to $16.3 million compared to $25.2 million in 2Q16.

Keppel T&T notes that volumes and margins for its logistics division remain under severe pressure with the challenging market outlook, but the division will nonetheless continue to focus on building complementary capabilities to capitalise on the e-commerce sector.

It adds that its data centre division is partnering with several government agencies and technology partners to explore innovations in cognitive and green data centre solutions for land-scarce Singapore in a tropical climate.

In a separate filing to the SGX, Keppel T&T says Keppel Data Centres Holding (KDCH), a 70-30 joint venture (JV) between itself and Keppel Land, has signed two memoranda to explore using innovative spaces for data centres.

The first memorandum of understanding (MoU) between KDCH and JTC aims to explore the feasibility of deploying data centres underground to provide highly resilient and secure services to customers looking at high tiered data centres.

Under the terms of the MoU, both parties will set out to establish a concept and design specifications applicable for an underground data centre that can match performance standards of an equivalent aboveground data centre.

The second is a Memorandum of Intent (MoI), in which KDCH will collaborate with the Infocommunications Media Development Authority of Singapore (IMDA) and Huawei International (Huawei) to explore the feasibility of deploying a high-rise green data centre that features energy-efficient technologies.

KDCH’s contribution to the collaboration will include the identification of possible data centre building sites as well as studies into the design, construction and operation of the facility, says Keppel T&T.

“We look forward to potentially exploring new ideas with the collaborations, such as improving energy efficiency and technical space layout. With the concerted efforts of our partners, we are proud to support Singapore’s Smart Nation vision,” says Wong Wai Meng, CEO of Keppel Data Centres.

Shares of Keppel T&T closed 3.2% lower at $1.66 on Wednesday.

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