A resilient business model has helped Qube generate meaningful underlying earnings it has announced as part of its full year results.
Notwithstanding the weakening of its key markets, Qube has, through strong market positions and diversification grown its underlying revenue and earnings for the first half of the financial year.
As its operations were defined as essential services, Qube continued to operate throughout the COVID-19 restrictions albeit with lower overall volumes the company said in a statement.
Qube's bulk export operations saw minimal impacts, however, container, import break bulk cargo and automotive volumes didn't enjoy the same fate.
The second half of FY20 was unprecedented in terms of the number and impact of external events that affected Qube’s operations and earnings with bushfires and adverse weather events across the country impacting Qube’s business in the early part of the calendar year.
Qube, despite these disruptions, was still on track to deliver positive underlying full year earnings growth in FY20, until impacts of COVID-19 reduced Qube’s revenue and resulted in additional costs from February.
Cost saving initiatives and the receipt of JobKeeper payments of which it received $13.5 million, according to Qube, have helped to partially mitigate escalation of these impacts on the business.
Qube’s associate Patrick was also impacted by COVID-19 in the period through lower market volumes as well as additional costs to provide a COVID-safe workplace.
The outlook for Qube, however, was far from gloomy.
Qube said the underlying financial results for the Operating Division were particularly pleasing as earnings growth was achieved over the prior comparable period despite headwinds in a number of its markets which impacted volumes and placed pressure on margins.
The result benefitted from a contribution from acquisitions and new contracts in the period.
New agreements with Shell Australia and BlueScope Steel which, when fully operational, are expected to represent its two largest contracts by revenue.
Recent agreements with Woolworths Group Limited who committed to Moorebank Logistics Park (MLP) to develop highly automated regional and national distribution centres were, with the $500 million it established in additional bank facilities and acquisition of Quattro, a grain handling business, in March, have created additional liquidity.
Qube Managing Director Maurice James said the company had delivered a sound financial performance in FY20 in light of the considerable, unexpected and unprecedented challenges that affected the broader economy and Qube’s activities.
“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 the Coronavirus (COVID-19) pandemic,” he said.
“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.”
Qube apportioned praise to its experienced management team and workforce who were able to rapidly and effectively respond to partly mitigate the impact of the many events of the year on its business.
A significant investment pipeline continued across the Group, with the Board commited to reducing the final dividend to 2.3 cents per share, fully franked.