In the AGM Presentation, Qube’s Managing Director Maurice James today provided the business update on first quarter’s performance of Fiscal 2019 with no change to full year outlook.
On Logistics business front, the company eyes earnings benefitting from MCS acquisition and new contracts and businesses secured in financial year 2018. However, the industry remains competitive with ongoing rate pressures and continued impact of drought across Australia. Solid volumes growth has been achieved across the Qube’s Ports with substantial rise in transportation of forestry products, energy, fertilizer and general cargo. The management advised that BOMC development underway with completion now expected in December due to delay arising from adverse weather conditions.
Since the start of Fiscal 2019, Qube Holdings Limited (ASX: QUB) has been strengthening the bulk haulage activities including the ramp-up of new contracts secured in Fiscal 2018. Further, the company has acquired Western Australia based Russell Park Industrial Estate in August 2018 for approximately $40 million to provide additional warehousing capacity for bulk commodities.
But on the negative side, the company has witnessed a softening of motor vehicle imports and steel products greater than expected, which is likely to continue to be under pressure for remainder of Fiscal 2019.
In the Annual General Meeting, the company stated that Qube’s Moorebank logistics park had “pleasing earnings contribution from rental income, management fees and ancillary income” for the Q1 FY19. Company’s told its shareholders that its infrastructure and property business has performed better than expected with higher volumes of project and general cargo, and bulk volumes compared to pcp as well as new customer wins.
Patrick which is a 50-50 joint venture owned by Qube and Brookfield has shown continued market growth with around 6.0% (TEU) in Q1 FY 19 vs pcp, trending above the company’s long-term expectations. Qube said although competition for new volumes remains high with continued rate pressures, Patrick remains at an advantageous position ahead of market share gains. Further, during Q1 FY19, the company has extended the maturity and increased the size of Qube’s bank facilities with improved pricing, providing substantial capacity to fund growth.
In FY19, Qube expects to report a solid increase in underlying NPAT and return to earnings per share growth, pre-amortization. The growth outlook is based on significant improvement expected in Operating division and Patrick business which provides container stevedoring services in the Australian market. The Company said Operating Division is expected to generate reasonable growth reflecting the full year contribution from MCS, and Patrick is also anticipated to continue making positive progress ahead of market share gains during Fiscal 2019. However, the company expects Infrastructure and Property division to perform in line with previous year’s performance.
Qube currently expects total capital expenditure to range between $350 million and $450 million in FY19, comprising around 20% maintenance capex and 80% growth capex.
On the day of its Annual General Meeting, Qube traded at higher levels with share price up by 1.587% to trade at $2.560 as on 22 November 2018 (2:49 PM AEST).
There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.
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