Posted on February, 23, 2024 at 09:30 am
AUSTRALIA’S largest import and export logistics company, Qube, expects to see positive financial returns to its infrastructure operations after launching an in-house grain-trading business at the end of last year.
Qube announced the new venture as part of its half year ended December 31 financial reports released on Thursday.
According to the release to the ASX, the company “commenced limited grain-trading capability late in [HY24] to optimise the utilisation of Qube’s grain infrastructure within appropriate risk parameters”.
“The key reason for doing this is to also feed our infrastructure,” Qube chief financial officer Mark Wratten said.
“We don’t expect to make much margin on the actual trading of the grain; it’s about making sure that we are feeding our infrastructure which will have the strong margins and even improved margins…as we leverage the utilisation of that.”
Qube also confirmed that it had recruited several experienced individuals to lead the grain-trading business.
These include Narromine-based Ginni Brown as grower relationship manager, and Toowoomba appointments are Rebecca Cameron as manager logistics and trade, Owen Goddard as national container business manager, and Matthew Pattison as general manager trading.
The movement is part of Qube’s long-running shift towards increasing its grain and agriculture logistics capabilities.
The company purchased Viterra’s agri rail terminal and handling facility at Narrabri last year.
Throughout 2020 and 2021, Qube acquired the Quattro terminal in Port Kembla, Agrigrain’s sites at Coonamble and Narromine, and the Newcastle Agri Terminal in 2021.
Qube reported earnings before interest, taxes, depreciation, and amortisation of $156.8 million for HY24, up 8 percent on the previous corresponding period.
Overall revenue grew 8.7pc to $1.63 billion.
Container terminal operator, Patrick Terminals, which is 50pc owned by Qube, was the largest driver of the earnings growth.
Qube’s Logistic and Infrastructure business unit saw a modest increase in EBITDA for HY24, with a rise of 2.9pc to $121.9M.
Lower grain volumes were a key weakness for the segment during the half and impacted the overall financial outcomes.
Qube managing director Paul Digney said the total tonnes handled across Qube’s two agri terminals declined by over 57pc from around 1.6 million tonnes in HY23 to approximately 700,000t in HY24.
He said given the relatively high fixed cost-nature of the grain terminals and bulk rail equipment, the lower volumes and resulting weaker revenue had a larger impact on Qube’s earnings and margins.
“Our agri volumes, particularly bulk grain in New South Wales, were lower than expected and materially lower than the same period last year,” Mr Digney said.
“However, we are expecting good grain improvement in NSW in the second half.
“This is due to more favourable market conditions and also the commencement of Qube trading activities which will drive revenue into our agri infrastructure in NSW.”
Offsetting the drop in grain volumes was continued high volumes across most of Qube’s containerised activities including transport, empty container parks and warehouse activities.
Alongside purchasing the Narrabri site, Qube in late 2023 announced the acquisition of Western Australian container transport and logistics operator Stevenson Logistics, and the remaining 50pc share of New Zealand logistics business Pinnacle.
Mr Digney said Stevenson Logistics was located at the port precinct at North Fremantle.
He said the purchase would expand the company’s capabilities and “exposure to the hay/agri export market in Western Australia”.
He said both acquisitions were performing in line with expectations and are expected to make an increased contribution in FY24 and beyond.
Qube operates at over 160 locations across Australian, New Zealand and South-east Asia.
Its operations include services covering road and rail transport, warehousing and distribution, container parks and related services, and intermodal logistics hubs including rail terminals and international freight forwarding.
Source: Grain Central