Freight Rail

Qube revenue up as Moorebank tenant is finalised

Qube Holdings was able to deliver earnings growth despite challenges in some parts of the business.

According to half-year financial results, underlying revenue for Qube was up 12.9 per cent to $970.1 million – with underlying Net Profit After Tax and Amortisation (NPATA) up 5.1 per cent to $76.3m.

Qube is Australia’s largest integrated provider of import and export logistics services and admitted that the company had reasonable earnings growth despite economic headwinds.

Major contracts signed with Shell Australia and Bluescope Steel helped support medium term growth, as did the completion of the Target warehouse, Import/Export (IMEX) terminal, and commencement of rail operations at Moorebank Logistics Park (MLP) in November last year. 

Commercial and legal negotiations are progressing with a potential major tenant for a material part of Moorebank Precinct West (MPW) and binding agreements are being finalised. It is now expected that the counter party’s board will consider approval of the finalised agreements in the near future.

The unnamed counter party had previously signed the reservation agreement with Qube to secure an area at MLP on MPW. 

Qube board of directors stated that based on the current commercial terms, the area to be leased by this party will be considerably larger and in a different location to that originally contemplated by the reservation agreement and the warehouse construction is likely to commence in calendar 2021, which is earlier than previously expected. 

Based on the extensive negotiations that have taken place, Qube expects that negotiations of the binding agreements will be concluded successfully but are subject to the counter party’s Board approval. 

“The development and lease would represent a key milestone for the MLP project and confirms the significant logistics benefits that the site can offer tenants,” Qube board of directors said in a statement.

Statutory earnings (NPAT) for the period were $51.7m, which was lower than the prior corresponding period’s statutory earnings and Qube’s underlying earnings for the current period.

Qube stated the impact of the new lease accounting standard (AASB 16) that was applied to Qube from 1 July 2019 reduced Qube’s statutory after-tax earnings in the period by around $10.3m, but had no impact on Qube’s underlying earnings or cash flow.

Maurice James, Qube managing director said there has been a steady performance across the Qube group demonstrating again the resilience of our earnings base across our chosen markets. 

“Qube was able to deliver earnings growth despite challenges in some parts of the business including declining motor vehicle and container volumes and the continued effect of the drought,” James said.

Qube has been assessing the potential impact on its FY20 full year results from recent events including the bushfires, adverse weather events across the country in early calendar 2020, as well as the coronavirus. 

“Although these events have not had a material impact on Qube’s first half results, Qube currently expects some weakness in its second half underlying earnings as a result of the above factors that is likely to result in the level of underlying earnings growth in FY20 being lower than previously forecast,” the Qube board of directors said in a statement.

“The uncertainty of these events, in terms of the quantum of their impact on Qube’s earnings and their likely duration, makes forecasting near term earnings inherently uncertain.”

Qube’s board of directors said they believe the company is placed to continue to deliver sustainable, long-term earnings growth from its strategic assets and strong market positions.

 

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