Qube emphasises positives before challenges


Earnings growth seen across company despite slowing economy

Qube emphasises positives before challenges
Trains are now running to Moorebank

 

Returns from Moorebank Logistics Park began flowing this month as logistcs and terminals business Qube sees a national economy starting to hit the brakes.

That the company was able to see continued growth is down to its diversification and "strong market positons", according to Qube chairman Allan Davies.

"Construction of the IMEX [Import-Export] terminal and the rail link from the Southern Sydney Freight Line was completed in July and I can confirm today that revenue-earning trains running to and from Port Botany commenced a little over two weeks ago," Davies says in his annual general meeting address.

"A major tenant, Target Australia, has now commenced operations.

"Progress on attracting other tenants has been excellent and in accordance with the company’s expectations."

That said, MD Maurice James’ later presentation does note total capital expenditure on for the Moorebank is forecast to be about $150-$200 million higher than expected, due primarily to the enabling and precinct infrastructure works necessary to be undertaken to enable future warehouse developments.

This includes increased scope of works and complexity of design to accommodate higher specification warehousing, such as raising of site level and increases in loading capacity, and additional planning and consent approval requirements, particularly related to on-site water detention and overall stormwater.

The impact is to be partly offset by reduced costs to construct future warehouses, "and is not expected to materially impact Qube’s overall target project returns given the material increase in the value of quality industrial properties". 


Read about Qube’s massive Shell Australia deal, here


The Qube board is also pleased with returns from this half ownership of domestic container stevedore Patrick – net profits after tax (NPAT) being up 11.5 per cent to $30 million – though volumes are subsiding.

"Patrick’s strong cashflow also allowed distributions of $100 million to Qube in the period through a combination of interest, franked dividends, repayment of shareholder loans and return of capital," Davies says.

While the Australian Competition and Consumer Commission’s (ACCC’s) annual Container Stevedoring Monitoring Report notes infrastructure surcharging bolstering stevedore bottom lines generally, Davies notes improved market share was in the mix.

Patrick has recontracted about 60 per cent of its volumes until the last quarter of calendar 2021 and the Fremantle lease extension is due to be complete "shortly.

The company expects synergies from September’s purchase of port logistics firm Chalmers to be delivered this year

Davies expects this financial year to unfold much like the last one, if not a bit better, "with a continuation of the subdued trends in container, grain, vehicle and general cargo volumes.

"Qube will seek to continue to mitigate these pressures through its scale, diversification, further cost reductions where possible, and ongoing benefits of its investments."

First half results, due in February, are expected to see benefits from:

  • full period contribution from the Altona warehouse operations
  • stronger than anticipated base metal and mineral sand volumes in the Bulk activities
  • continued increase in oil and gas related activities for the Ports arm
  • full period benefit from contract wins secured in last financial year and capex including the Russell Park property and  mining services firm LCR acquisitions

 

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