Profit halved as company eyes two biggest revenue deals
Qube’s annual results show a hefty hit to the bottom line but the logistics and freight facilities firm bounce back once two meaty deals come on-stream.
Though revenues were up 3.4 per cent to $1.9 billion, but one-off costs say its net profit after tax (NPAT) fall 55 per cent to $87.5 million.
Pandemic costs of $21 million overall, of which around $10.5 million are non-cash expenses, go to NPAT.
“Qube is pleased to have delivered a sound financial performance in FY20 in light of the very considerable, unexpected and unprecedented challenges that affected the broader economy and Qube’s activities,” Qube MD Maurice James says.
“The events of 2020 tested the strength and resilience of the company in ways which no-one could have predicted. This result once again demonstrates the success of our diversification strategy which protected the company as markets were hit by . . . pandemic.
“We were also able to adapt rapidly as an organisation to protect the health and safety of our people, deliver on customer requirements and minimise the economic damage to the Group.
“We are also well positioned for growth post pandemic with conservative gearing, and a strong balance sheet with substantial funding capacity.”
The group reveals it set up a pandemic response plan early in March to mitigate the impact on earnings and minimise the need for any employee stand-downs or job losses.
Hardest hit are the Operating Division, at $135 million, and the Patrick stevedoring joint venture while $7.5 million was lost on revised work practices.
The division booked a $6 million hit through a trade debtor recoverables review and $5.5 million in asset base costs
Against that, $10.5 million was saved through initiatives including temporary reductions in fixed remuneration and board fees, reduced travel expenditure, reduced property and equipment costs as well as lower variable operating costs.
Qube also gained around $13.5 million in JobKeeper payments “to assist in ensuring that the regional and automotive ports remained operational and job losses were minimised”.
Longer term, it expects the December 2019 Shell and January 2022 BlueScope contracts signed during the year “to represent Qube’s two largest contracts by revenue”.
Read how Qube linked with Woolworths, here
The Operating Division reported underlying revenue growth of 9.9 per cent to $1.8 billion and earnings before interest, tax and amortisation (EBITA) of 1.9 per cent to $163.7 million.
The revenue growth comprised a 15.7 per cent increase in revenue from the logistics activities to $823.2 million, and a 5.4 per cent increase in revenue from the ports and bulk activities to $962.2 million.
The earnings of the Infrastructure & Property Division declined, with underlying revenue and underlying EBITA decreasing by 5.6 per cent and 48.5 per cent to $98 million and $20.2 million, respectively. This was mainly attributable to a decline in Australian Amalgamated Terminals’ (AAT’s) revenue of approximately 8 per cent as a result of low volumes of vehicles, ro-ro, general and project cargo.
“This translated into a much larger percentage decline in AAT’s earnings given the high fixed cost nature of this business,” Qube says.
The underlying contribution from Qube’s 50 per cent interest in Patrick was $26 million NPAT, a 13.3 per cent fall, of which $7.5 million made it to Qube, down from $28.4 million.
Much of the NPAT went on various new cranes for Melbourne, where discussions have progressed with relevant parties in relation to on-dock rail and a lease extension at East Swanson Dock, and Fremantle as well as rail capacity growth capital expenditure at Port Botany, with Stage 1 of the latter expected to be completed by the end of the calendar year.
Qube expects Patrick’s Fremantle lease to be finalised by the end of the calendar year.
At the Moorebank intermodal facility, the company expects a of $610-700 million capital expenditure to $1.1-1.2 billion on developments including:
- the Woolworths national distribution centre and regional DC warehouses, at $420-460 million
- increased costs for the IMEX rail terminal automation including additional works within the terminal area as well as the surrounding infrastructure to enhance the overall operational capability and efficiency, at $100 million
- additional roadworks required by Transport New South Wales, storm water retention works (required under the NSW planning approval issued in November 2019), land preparation works (due to higher specification warehouse requirements) as well as higher costs associated with Moorebank Avenue works following the recent arbitration outcome with the Moorebank Intermodal Company, at $90-140 million.
Meanwhile, in Victoria, Qube also continued with the planning process for the future development of the Beveridge intermodal site north of Melbourne.
The company’s support of Rural Aid came to more $75,000, equivalent to more than 13 full truckloads of hay and supplies.