Qube rides long growth wave in first half


Fruition looms for Moorebank intermodal planning

Qube rides long growth wave in first half
Container handling went well generally in the first half

 

Transport and logistics titan Qube has lifted its first half profit growth compared with last year by 36 per cent to $61.5 million with an even performance across most divisions.

Highlights were the Logistics division’s ‘underlying’ gross profit rise from $34.8 million in the previous first half to $79.8 million and Infrastructure & Property rising from $11.9 million to $18.3 million.

Terminals arm Patrick boosted earnings, with lease extensions and the Port Botany rail automation project both highlights.

Barring planning or approvals issues, the firm that spent most of the decade building its Moorebank intermodal hub in western Sydney expects rail operations there to begin in the calendar year’s third quarter and its Target warehouse to be completed before that.

It says prospective customer demand prompted it to progress with a 50,000 square metre warehouse to be operated by Qube Logistics on behalf of multiple tenants and a smaller 17,800 sq m warehouse to be leased to third party tenants including one tenant that has already committed to approximately two-thirds of the available space.

But it was not all plain sailing, with those arms exposed to farming and vehicle logistics suffering – the latter due to a larger than expected decline in motor vehicle.

"This is a very solid first half result which again highlights Qube’s strong market positions and the importance of our diversification strategy," Qube MD Maurice James says.

"Qube was able to deliver very strong earnings growth despite challenges in some parts of the business including declining motor vehicle volumes and the ongoing effect of the drought."

This has impacted the Logistics division that also handles containers, leading to "a decrease in containerised grain exports and bulk grain volumes, both of which are transported on rail by Qube.

"In addition to the direct revenue loss from these activities, the higher than typical imbalance between full import and full export containers due to lower containerised grain exports has meant that Qube is unable to realise the full operational efficiencies from a more balanced import and export mix."

Patrick

Patrick, of which Qube owns half, contributed $15 million in net profits and a 2 per cent rise in market share of national container handling to 54 per cent compared with the previous first half.

The stevedore saw a first half rise of about a 4.4 per cent increase in twenty-foot equivalent units of containers (TEU) or 3.4 per cent increase in lifts.


Read about Patrick’s contribution to last year’s annual results, here


"There was a decline in the growth rate towards the end of the period and the full year volume growth rate is currently expected to be below the growth in the first half and more in line with Qube’s long term expected growth rate in TEUs of 3-4%," it says.

The stevedore is set to gain from New South Wales government port-rail investment announced last year, to which it will contribute $70 million and which will boost its automation plans.

"Patrick’s investment will deliver facilities with four rail sidings that are 600 metres long and the introduction of new automated rail mounted gantries will allow faster stripping and loading of trains, thereby supporting much earlier availability of containers for importers.

"When completed, Patrick’s automated rail terminal will have a throughput capacity of about 1 million TEU per year.

"Rail access to the existing Patrick terminal is intended to remain throughout the project delivery. The project is due to be completed by 2023."

"During the period, the Fremantle Ports Authority undertook a tender process for the leases at the two terminals at Fremantle Port. Patrick’s existing lease at Fremantle expires on 30 June 2019.

"In early February 2019, Patrick was advised that it had been nominated as preferred operator of its existing site for an initial seven year lease term, subject to negotiation of the relevant agreements."

Qube also defended Patrick’s version of the controversial infrastructure surcharge, described as "infrastructure levy", on port-related haulage and trade as helping recoup investment cost "partly from the key beneficiaries of the investment".

 

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