Qube grows revenue in competitive half


Stable volumes predicted for rest of 2018 after first half profit fall

Qube grows revenue in competitive half
Qube managing director Maurice James

 

Logistics company Qube Holdings has recorded a 5.4 per cent fall in first half net profit after tax to $45.2 million, despite a 5.6pc increase in revenue to $797.2 million.

Qube had recorded a net profit after tax of $47.8 million for the first half of 2016-17, the previous corresponding period, on the back of $755 million in revenue.

In its first-half announcement, Qube says the decline is due to an unusual bump in the prior year’s earnings – an extra $22.2 million from its stake in rail and port operator Asciano as part of the completion of the Patrick acquisition.

Company MD Maurice James says the Qube had recorded a solid first half result in the face of ongoing rate pressures and a competitive operating environment.

"Qube’s ability to achieve revenue growth in all divisions and a good overall earnings performance despite the competitive challenges reflects the quality of Qube’s business and the benefits of the scale and diversification that Qube has been developing," James says.

The company expects stable volumes and a similar economic and operating environment for the remainder of the current financial year, with limited capacity to secure rate increases.

"Qube will aim to maximise its margins through its ongoing cost focus and by leveraging its past investment in facilities, equipment and technology to drive scale, operational efficiencies and by delivering a superior customer service," it said.

"Overall, subject to no material adverse change to economic or operating conditions, Qube continues to expect to deliver an increased underlying net profit after tax (pre-amortisation) in FY18."

Strong volumes support logistics division

Robust volumes ae recorded in most operations, the only significant area of weakness being in grain volumes, due to adverse weather conditions in New South Wales and southern Queensland.

Along with the cost inefficiencies of its exit from the Sydney Haulage rail site at Port Botany in April last year, this saw Qube’s logistics division underlying earnings fall 1.9 per cent to $36 million on the back of $365 million in revenue.

Qube says its acquisition of Maritime Container Services (MCS) late last year will give it a larger site with a rail terminal and empty container park operations.

However, the company has given an undertaking to the Australian Competition and Consumer Commission (ACCC) not to integrate MCS with its existing business until March 15, by which time the ACCC is expected to have completed its review of the acquisition.  

Qube also announced progress on its Moorebank Logistics Park project, with an in-principle agreement reached with a tenant to reserve 150,000 square metres at the project for up to seven years, for the construction of a warehouse.

Qube’s Ports & Bulk division delivered underlying revenue growth of 9.9pc to $399.6 million and saw underlying earnings increase by 20pc to $42 million – though continued losses from vehicle storage and transportation group Prixcar saw Qube further impair its investment in the company by $6 million.

Stevedoring arm Patrick performed in line with Qube’s expectations, contributing $13 million in net profit after tax, of which $8.7 million was interest income.

While volumes are trending up, ongoing shipping line consolidation and surplus terminal capacity at terminals in Sydney, Melbourne and Brisbane means the market will be highly competitive in the short term, Qube says.

"Over the medium term, if market volumes continue to grow at or above its expected long term target of at least 3-4pc pa (i.e. slightly above GDP growth), then customers will again prioritise service levels and efficiency." 

 

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