Slight profit dip for busy giant Qube


One-off items take edge off solid annual results performance

Slight profit dip for busy giant Qube
Qube sees costs and impairments take the gloss off income growth

 

Qube recorded a 6 per cent fall in annual net profits to $77.3 million, though revenue was up 14 per cent to $1.51 billion.

The net profit after tax (NPAT) decline stems from several accounting and tax adjustments, the terminals and logistics group reports.

These included one-off costs associated with acquisitions of $37.1 million, stamp duty of $27.9 million, and transaction and restructure costs of $9.2 million.

Also in the mix were impairment of Qube’s investment in Prixcar of $18.3 million and of the Dampier Transfer Facility and barge of $8.1 million.

The company expect both divisions, Logistics and Ports & Bulk to grow over this financial year in market conditions similar to last year.

"We have further diversified funding arrangements and strengthened our balance sheet to give the company greater flexibility to fund growth in the years ahead," MD Maurice James says.

However, this will be crimped in Sydney as Logistics operations faces additional interim operational costs as the business waits for the Moorebank Logistics Park’s facilities to be developed over the next two years.

Patrick

Stevedore Patrick, in which Qube has a 50-50 joint venture stake with Brookfield, had experienced new competitive burdens but had managed to extend contracts for 85 per cent of its volumes.

Container lifts increased 3.3 per cent and estimated market share for the 12 months period across the four container terminals was around 47.3 per cent of total lifts, a slight fall.

Patrick finalised a Port of Fremantle lease extension to June 30, 2019 and it is said to have "well progressed" Port of Melbourne rent reviews negotiations.

Spending rise

Though Qube’s group income was leapt solidly, costs and expenses rose on almost every line.

Direct transport and logistics costs were up from $333 million to $370 million, employee benefits rose from $499 million to $557 million and fuel, occupancy and property costs jumped from $62.8 million to $83.4 million and fuel, oil and energy spending rose from $75.7 million to $83.5 million.

Logistics

Logistics’ profit rose from $41.5 million to $44.6 million including one-off items as revenue roe from $594 million to $662 million.

"The increase in revenue reflects the success in growing Qube’s customer base across a range of sectors including agricultural, retail and resources as well as growth within the existing customer base," the company says of the division.

"The decline in margin was largely attributable to costs arising from the illegal industrial dispute at Patrick’s Port Botany facility in May-June which impacted Qube’s rail operations and reduced underlying earnings by an estimated $2.2 million, as well as ongoing pressure on rates as a result of the competitive environment."

Ports & Bulk

Ports & Bulk’s profit rose fell from $53.5 million to $48.3 million, despite revenue rising from $676 million to $743 million.

"Key highlights in the period include successful entry into Esperance Port with multiple customers contracted, expansion of logistics services into supply chain management and Government services, along with growth in volumes handled and/or stevedored by Qube across a range of products including fertiliser, forestry products, grains, scrap metal, bulk commodities and motor vehicles," the company says.

"Activity in Qube’s oil and gas related areas remained weak and is not expected to improve in the short to medium term. Accordingly, Qube impaired the carrying value of its Dampier Transfer Facility and barge by $8.1 million as these assets predominantly service oil and gas production related activities."

Strategic Assets

The Strategic Assets division controls Moorebank, Minto and now 50 per cent of Australian Amalgamated Terminals (AAT).

It profits fell from $16.5 million to $10.6 million with revenue fairly level at $54.1 million.

Moorebank has five of its six warehouses on short- and medium-term leases and land preparation and construction has begun on the rail spur.

Minto took some temporary tenant vacancy pain but has leases agreed with Mazda Australia and Ceva, the latter on an upgraded site, for a total area of about 151,000 square meters or 56 per cent of the total leasable site area.

A new 10-year lease agreement with Mazda will add to Qube’s earnings once the lease begins.

This is expected to be in July after the required vehicle storage and processing facility is completed.

Qube also saw capital expenditure hit $1.4 billion on the purchases, including new locomotives and wagons to support continued growth in rail activities as well as the Austrans acquisition.

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