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Qube signs Target as FY earnings rise

Prashant Mehra  |  23 Aug 2017Text size  Decrease  Increase  |  

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SYDNEY - [AAP] Logistics group Qube Holdings (ASX: QUB) expects to continue its improvement in underlying profit this year and will boost spending at its Sydney freight interchange, where it has just signed department store Target as a major customer.

Qube will develop 37,860 square metres of warehouse and office space for Wesfarmers subsidiary Target Australia at its Moorebank Logistics Park in Sydney.

The group announced the 10-year lease with Target, with options to extend, and a five-year deal to move goods for the retailer between Port Botany and Moorebank, as it posted a drop in headline full-year profit on Wednesday.

Managing director Maurice James said the company was in discussions with several potential tenants, some of which were in an advanced stage, but declined to put a time frame on future announcements.

Qube reported a 6 per cent drop in full-year profit to $77.3 million, weighed down by costs related to its acquisition of stakes in Asciano's Patrick Terminals business and Australian Amalgamated Terminals during the year.

However, underlying profit, which strips out significant items, rose 18 per cent to $102.2 million, while headline revenue for the year to June 30 was up 14 per cent to $1.5 billion.

Earnings in the logistics division rose 7 per cent to $66.1 million but profit margins fell, while earnings in the ports and bulk division rose 17 per cent to $73.5 million.

Earlier this year, Qube partnered with Canadian infrastructure giant Brookfield and six other global investment funds to take over rail and ports operator Asciano for $9.05 billion.

Qube and Brookfield jointly acquired Asciano's Patrick container terminal business, while Qube also bought out the remaining 50 per cent stake in AAT from Brookfield.

Mr James said market conditions remain challenging but flagged earnings growth across both Qube's major divisions.

"There is considerable rates pressure across the market, where there is spare capacity from investment by new stevedores and some very aggressive operators," he said.

Qube is developing Moorebank as the largest intermodal facility in Australia, with up to 850,000 square metres of warehouse space and a direct rail link to Port Botany, one of the country's busiest ports.

Qube shares were up 4.3 per cent to $2.805 at 1400 AEST.

QUBE FULL YEAR PROFIT SLIPS

* Net profit of $77.3m vs $82m

* Revenue of $1.51bn, up 13.5pct

* FY dividend 5.5 cents, unchanged

 

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