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Qube upbeat despite half-year profit slip

 

Qube Holdings expects to deliver an improvement in full-year underlying profit amid the likelihood of stable volumes and limited capacity to secure rate increases.

The logistics company reaffirmed its guidance on Thursday despite falling behind in the first half, with net profit down 5.4 per cent to $45.2 million.

Underlying profit fell 13.5 per cent to $53.7 million, but revenue for the six months to December 31 was up 5.6 per cent to $797.2 million.

Qube blamed the profit decline on a one-off gain in the prior corresponding period, when it earned $22.2 million on its holding in the erstwhile rail and port operator Asciano.

Qube had acquired a 50 per cent stake in the Patrick container terminals business in 2016 as part of Asciano's joint takeover by Qube, Canadian infrastructure giant Brookfield and six global investment funds.

It also wrote down the value of its stake in Qube's stake in vehicle storage and transportation business Prixcar by $6 million.

Managing director Maurice James described the company's first-half results as "solid".

"Qube's ability to achieve revenue growth in all divisions and a good overall earnings performance, despite the competitive challenges reflects the quality of business and the benefits of the scale and diversification that Qube has been developing," Mr James said.

Revenue in the main ports and bulk division rose 9.9 per cent to $400 million, while earnings rose 20 per cent to $42 million, despite volumes dropping at the Utah Point facility in WA

In the logistics division, revenue was up 11 per cent to $365 million, but earnings dropped 1.9 per cent to $36 million as low grain haulage volumes and Qube's exit from the Sydney Haulage site weighed.

The Patrick business's revenue rose 31 per cent to $286.2 million, and Qube's 50 per cent stake yielded a profit of $13 million.

Container lifts at Patrick were up seven per cent in the half year, Qube said, but warned that rates remained under pressure in a highly competitive market.

Qube, which last year signed up department store Target as the first major tenant at its upcoming Moorebank Logistics Park in western Sydney, said it has reached agreement with another prospective tenant to reserve land there for future construction of a warehouse.

The company declared a fully franked interim dividend of 2.7 cents, unchanged from a year ago.

By 1500 AEDT, Qube shares were down 3.8 per cent to $2.42.

QUBE HALF YEAR PROFIT SLIPS:

* Net profit down 5.4pct to $45.2 m

* Revenue up 5.6pct to $797.2 m

* Fully franked interim dividend of 2.7 cents, unchanged.