NEXTDC profits slide despite decent first-half revenue
Written on the 23 February 2018 by David Simmons
NEXTDC (ASX: NXT) has reported a significant profit drop, despite achieving sound revenue during 1H18.
The group's profits dived by 56 per cent to $8.4 million, down from the $19.3 million figure it achieved during the first-half FY17.
In complete contrast to its profit result, NEXTDC recorded a revenue boost of 32 per cent to hit $77.5 million.
The company has increased construction of key infrastructure projects, including opening two new data centre facilities in Brisbane and Melbourne, completing the construction of a new Sydney data centre, and expanding existing facilities in Sydney and Perth.
The group also acquired a significant stake in Asia Pacific Data Centre Group (ASX: AJD) worth 29.2 per cent of the company.
In December, NEXTDC announced its intention to wind up Asia Pacific Data Centre (APDC) based on "elevated concerns" it holds about 360 Capital Group's ability to manage APDC.
The two companies were engaged in an ongoing battle to takeover APDC throughout 2017, but 360 Capital outbid NEXTDC and holds the majority of shares in the company.
NEXTDC says the significant spend on infrastructure projects is part of its strategy to be well and truly ahead of its competition.
"NEXTDC has a clear strategy to differentiate its services through in-house engineering innovation and the adoption of new technologies and cooling systems," says the company in its first-half Director's report.
"These investments will position us to deliver significant customer benefits, reinforce our market differentiation over the longer term and deliver scalable growth, reducing operating costs and increasing revenue."
The group has signalled a bright future, flagging significant orders at the Sydney data centre site for more than 5MW of capacity. Revenue recognition for these orders will commence in FY19.
Business News Australia
Author: David Simmons