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.

 

NSW EPA trying to put the brakes on rail freight

Draft changes to NSW environmental standards could end regional branch freight lines, warns an alliance of rail industry leaders.

The joint letter signed by freight operators, farmers, and grain growers, and seen by Rail Express, responds to draft NSW EPA standards for rollingstock emissions and noise.

The draft standards set a noise ceiling of 85 decibels, a similar volume to a lawnmower, which would rule out diesel locomotives of the type used to transport grain from silos to port.

The 48 Class locomotives which service these branch lines have a low axel load of 12.5 tonnes, and are able to run on the older steel track which are restricted to locomotive axle loads of 17 tonnes.

The letter outlines that rather than improving environmental outcomes, the restrictions on noise, if implemented would force grain to be transported by trucks. The authors write that this could lead to an extra 25,000 B-double trucks on a “conservative” estimate. This would generate a 500 per cent increase in CO2 emissions compared with rail freight.

“In short, proposed new EPA environmental standards for diesel locomotives will significantly increase net [greenhouse gas] emissions in regional NSW,” write the authors. “This is a perverse outcome.”

Other costs include increased road accidents and fatalities and job losses of locomotive drivers and seasonal silo workers.

Additionally, by forcing grain onto trucks, the cost of exporting grain would increase, placing pressure on farmers’ margins at a time when drought is impacting upon agricultural profitability.

Emissions standards proposed by the NSW EPA also place a restriction on rail freight. While emissions kits can be installed in diesel locomotives, the cost of installing them would be prohibitive and would increase the consumption of diesel by five per cent, increasing greenhouse gas emissions. The weight of these emission kits can also push a locomotive over the axel load threshold.

The signatories to the letter are:

Dean Dalla Valle, Pacific National CEO

Klaus Pamminger, GrainCorp COO

Dick Honan, Manildra Group chairman

Jason Ferguson, Southern Shorthaul Railroad director

Maurice James, Qube Holdings managing director

Matthew Madden, NSW Farmers Association Grains Committee chair

Danny Broad, Australasian Railway Association chair

Geoff Smith, SCT Logistics managing director

Luke Anderson, Genesee & Wyoming Australia CEO

Anthony Jones, LINX Cargo Care Group CEO

Ian Gibbs, CF Asia Pacific / CFCL Australia executive chairman

New chair for Moorebank board

Alan Tudge, Minister for Population, Cities and Urban Infrastructure, has announced that the federal government has appointed Erin Flaherty as the Chair of the Moorebank Intermodal Company (MIC) board.

Flaherty will serve a three-year term and takes over from Kerry Schott as the head of the board for the company which is overseeing the construction of the intermodal terminal in south-west Sydney.

Flaherty has served on the boards of other transport projects, including for one year as a board member for Sydney Metro and five years as an advisory board member for the North West Rail project.

Coming to the MIC, Flaherty also brings her experience as the executive director of Infrastructure New South Wales and advisory board member for Sydney Light Rail.

Ultimately, the MIC is the Commonwealth entity responsible for facilitating the precinct’s development, which will be developed by the Sydney intermodal Terminal Alliance (SIMTA), owned by Qube Holdings.

Flaherty joined the MIC when she was appointed as a non-executive director in March 2019. This coincided with the transition from the construction to operational phase.

Once completed, the 243ha site will include 850,000sqm of warehousing fed by a non-stop shuttle between Moorebank and Port Botany. A rail terminal will connect the intermodal terminal with rail networks across NSW and around the country.

Qube train. Photo: Qube

Victoria’s Ultima Terminal will generate millions in new exports

Victoria’s minister for ports and freight Melissa Horne officially opened a rail freight terminal in Ultima, northern Victorian, for exporting to the Asian market.

The QUBE Ultima Intermodal Terminal officially opened yesterday, however trains have been running on the line since at least June according to Fully Loaded.

Recently, the state government spent $23 million on an upgrade of the Manangatang freight line. It went towards the replacement of sleepers over a 90km section of the line in the Ultima region by V/Line. Track formation was also improved with new ballast which will improve the ride quality for trains.

Two trains a week currently service the Ultima facility, but it’s expected that will expand to three or four trains a week.

“This new facility is creating jobs for the local community and is helping to get more freight onto rail – removing around 4,000 truck trips every year from Victorian roads,” Horne said.

QUBE, Pentarch Agricultural and Pickering Transport, through a joint venture, invested $3.65 million in the facility

“Already two trains a week are using this terminal to provide integrated rail solutions to the intermodal and bulk markets, and we hope to expand this when more local products become available later this summer,” QUBE Managing Director Maurice James said.

Hay from local farms is compressed and loaded into containers at the facility. The containers are then put on a train and taken to the Port of Melbourne for export to Asia.

Pentarch markets Australian oaten hay, cottonseed and other grain internationally and the new facility will generate millions of dollars in new exports to Japan, South Korea, Taiwan and China.