Qube delivers record results but Moorebank doubt continues

Qube Holdings increases revenue and profit but its defence tenant at Moorebank continues to stall intermodal terminal plans

Qube delivers record results but Moorebank doubt continues
Qube delivers record results but Moorebank doubt continues

By Anna Game-Lopata | February 26, 2013

Qube Holdings has increased its
revenue and profit but
its defence tenant at Moorebank continues to stall intermodal terminal plans.

The port logistics operator today announced a 32 percent increase to revenue to $526.3 million and a 19 percent profit boost to $37.8 million.

But the horizon remains murky for Qube’s intermodal terminal
project following the decision by its Defence Logistics tenant to exercise its option to extend the lease on Qube's Moorebank site in Western Sydney a further five years.

While this provides certainty of income for Qube, with a higher rent to apply from late March 2013, this outcome places a question mark on Qube’s ability to develop the 83 hectare site in line with its 2014 prediction.

The Sydney Intermodal Terminal Alliance (SIMTA), of which Qube is a 50 percent partner, has been trying to get its $1 billion plan to build a rail freight shuttle between Qube’s Moorebank site and Port Botany for about three years.

While it understands the imperative to build the freight hub at Moorebank, Defence Logistics is on the record as saying the supply of its overseas operations from the
Qube site must come first, making good on its sole discretion to extend
the lease starting this year.

Qube Managing Director Maurice James nevertheless remains hopeful saying negotiations continue over the future development of the property.

"Qube is continuing to actively engage with key stakeholders to gain the necessary approvals to progress the development of an inland terminal and related logistics activities on its site at Moorebank," he says.

Meanwhile the company’s Logistics division today reported record results with a strong improvement in margins.

James says the division was able to achieve significant organic growth and better asset utilisation through tailored solutions to its customers.

Underlying revenue increased to $272.5 million and underlying EBITDA increased to $40.4 million, an increase of 11 percent and 25 percent respectively on last December’s result.

James says the company’s 2012 acquisitions of
Macarthur Intermodal Shipping Terminal (MIST) and Independent Transport Group (ITG), now integrated have contributed significantly to the result along with a strong focus on costs and operating efficiencies.

"The demand for Qube’s port-rail services continued to increase, with Qube’s rail business benefitting from the availability of the locomotives and wagons acquired in the previous financial year," James says.

Qube secured several new rail contracts in the half with James confirming the company expects to acquire further rolling stock during the second half of FY 2013.

"Our development at Victoria Dock, which will provide additional hardstand capacity is well progressed and should be completed around the end of the current financial year," he says.

Qube’s Ports & Bulk Division also performed well, despite weakness from its customers with exposure to mineral sands.

James says the division generated a 13 percent increase in profit although this is not expected to be sustained over the full year.

"The diversity of the business geographically, by customer and product has nevertheless enabled growth in revenue and earnings,"
he says.

Revenue increased to $240.9 million and EBITDA improved to $42.8 million, an increase of 60 percent and 79 percent respectively on last year.

"The ports’ activities again benefitted from continued strong vehicle imports and sales which contributed to stevedoring, facilities access, storage and processing revenue."

James adds revenue and earnings from bulk activities increased following record volumes at Qube’s Utah Point facility which is now running at an annualised volume in excess of 12 million tonnes.

The division also benefitted from a full six months contribution from trucking operator Giacci Holdings which was acquired in March 2012, and the commencement of new contracts during the period.

In addition James spruiks greater brand awareness of the company together with a "reputation for innovative solutions" as leading to increased customer inquiries and a number of new business opportunities.

"Qube is now in a stronger position to deliver sustainable growth in the medium to long term," he says.

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