Australian diversified logistics company Qube Holdings [ASX:QUB] posted a mega result for its half year financial metrics for fiscal 2023.
Shares surged 11.4% when the company revealed that its interim net profit had captured double what it had earned the year before, surging from $56.3 million in December 2021 to $111.3 in December 2022.
Revenue had also increased 23% from $1.18 billion to $1.45 billion, pushing earnings by 23% and net profit after tax up again by 45%.
QUB is worth $3.33 on Thursday morning, the share price having surged 18.5% so far in the first two months of 2023:
Source: TradingView
Qube profit surges on logistics volume uplift
Thanks to a volume increase of around 70% in the group’s logistics and infrastructure — the handling of steel, containers, grain, and vehicles — the group’s underlying earnings before interest, tax, and amortisation (EBITDA) racked up $118.5 million for the half year.
The group’s interim net profit was most impressive as Qube reported double on the same time the year before, to the total of $111.3 million ($56.3 million in 2021).
Underlying revenue grew 23.1% to $1.5 billion, which included a flow-through of underlying earnings (EBITDA) growing 30.9% to $145.2 million, pushing underlying NPATA by 37% to $132.6 million.
Underlying earnings per share — before amortisation — went up 47.1% to 7.5 cents thanks to the higher NPATA and reduction of shares, with the company having completed its share buyback in May last year.
The board boosted the interim dividend per share (fully franked) by 25% from 3 cents to 3.75 cents.
The company spent around $211.8 million of gross capital expenditure in the period, including a growth CapEx of $64.6 million, maintenance CapEx of $114.2 million, and MLP Terminal CapEx $33 million.
Qube is presently forecasting FY23 CapEx to be around $400–500 million excluding potential acquisitions.
QUB’s expectations for FY23
Overall, Qube achieved revenue growth of 23.1%, exceeding GDP, and EBITDA margins improved despite continuing operational challenges.
The logistics group anticipates a continuation of solid activity, even as ongoing costs and revenue continue to be hampered by labour shortages, inflation costs, and high-port traffic.
A full recovery of cost increases is expected for FY24, supposing there are no unforeseen events that might compromise this.
Qube expects Patrick to deliver strong underlying EBIT in FY23, driven by ‘modest market growth, stable market share and improved margins through productivity initiatives’.
However, the group flagged Patrick’s earnings contribution in the second half will be lower than the first on diminishing imported container volumes and higher interest costs. A similar story was painted for the Operations Division, expected to pull at underling earnings in the second half also.
The group said actual full-year earnings will depend on market conditions, any further weather events, and the inflationary and interest rate environment.
Source: QUB
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Regards,
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For The Daily Reckoning Australia
