Corrigan has eye on Asciano prize but there is plenty to do otherwise
Qube, like the country, is facing hard times as the financial year plays out, Chris Corrigan believes.
In a speech to the company’s annual general meeting (AGM), the company’s chairman made plain that regardless of whether its takeover of Asciano is successful, Qube would have to continue focusing on cost reductions and ongoing operational efficiencies, particularly in its ‘Ports & Bulk’ division.
“Qube expects trading and economic conditions to remain difficult,” Corrigan says.
He reiterates that the underlying earnings from Ports & Bulk will be lower this year than last.
“This is a result of the conclusion of three significant contracts and the revised terms of the Atlas contract that occurred in the second half of FY 15,” he says.
Against that gloom, the division will see the Quattro grain facility and rail operations get underway.
Even with a successful the Asciano takeover bid, the boost to the company will take a while to materialise.
“Obviously the outcome of the Asciano proposal is uncertain but should we be successful in acquiring the container port assets, we would expect the transaction would be highly accretive to Qube shareholders in the medium term.” Corrigan says.
And though the company is carrying $519 million in net debt, is not expecting debt issues to arise.
Leverage at 27 per cent on June 30 remains below the bottom end of Qube’s target leverage range of 30-40 per cent.
Available cash and undrawn debt facilities of more than $260 million “provide substantial funding capacity to pursue further investment”.
Apart from the Asciano takeover bid, Moorebank continues to be front of mind for the company
Key priorities for the financial year will be financial closure on the arrangements at the Sydney intermodal hub, starting its construction and advancing discussions with target tenants for the warehousing.
“In parallel with this, Qube will progress its assessment of the optimal ownership and funding options for the warehousing to be developed at Moorebank,” Corrigan says.