Qube Holdings Ltd (ASX: QUB) released its FY20 financial report today. QUB shares are down 1.2%. The compares to a 0.7% gain from the S&P/ASX 200 (ASX: XJO) and All Ordinaries (ASX: XAO).
Here’s a video I recorded with Owen Raszkiewicz last week. We covered four of the most popular ASX reports. Stay tuned for our next video on Rask Media this Friday.
My take on the Qube result
Qube reported a 9% rise in underlying revenue, increasing to $1.8 billion. This was driven by a strong first half in the financial year. Yet, with the onset of the bushfires and COVID-19 in February, profits fell 15.4% to $104 million on an underlying basis.
This compares to a 32.2% contraction in statutory profit, to $214.7 million, due to the positive revaluation of its various property assets in the previous financial year.
Weakness was felt across the entire Qube business as global trade was forced to slow down, but it was particularly painful in container volumes and automotive shipments. The 50%-owned Patrick division saw a 9.4% fall in net profit to $34.5 million whilst the Infrastructure Division, including the Moorebank Terminal, fell 48.5% to $20.2 million. Both segments expect the weakness to be short-lived, providing upside once the pandemic subsides.
Despite the major disruptions and higher costs, management was able to deliver earnings growth over the prior period in a number of markets and win two major contracts, with Shell and BlueScope Steel Ltd (ASX: BSL), which will be their largest-ever by revenue once completed.
Qube Managing Director Maurice James stressed the resiliency of the businesses diversified and vertically integrated business model, and its ability to deliver a sound performance “in light of the very considerable, unexpected and unprecedented challenges”.
The Qube dividend was cut from 2.9 cents to 2.3 cents per share which was in-line with expectations.
My take: Tough conditions, but Qube’s market dominance supports the dividend.
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