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Results: Qube share price rose 4% on Thursday as underlying profit surges

The Qube Holdings Ltd  (ASX: QUB) share price closed 4.26% higher on Thursday at $3.18 per share after a strong full-year results release from the Aussie logistics group.

What did Qube announce yesterday?

On an underlying basis, Qube’s full-year revenue for FY19 climbed 4.7% to $1,728.6 million as earnings before interest, tax, depreciation and amortisation (EBITDA) surged 9.5% higher to $180.5 million compared to FY18 figures.

While statutory net profit after tax (NPAT) fell 1.4% to $196.6 million, underlying NPAT rocketed 15.4% higher compared to the prior corresponding period (pcp) to $123.2 million.

Statutory results were generally softer across the board for Qube which exclude “certain non-cash and non-recurring items”, however, it’s always worth considering exactly what management classifies as “non-recurring”.

Underlying NPAT before amortisation or “NPATA” climbed 13.4% to $139.2 million while underlying earnings per share before amortisation (EPSA) similarly shot 13.0% higher to 8.7 cents per share (cps).

In terms of segment performance, Qube has continued to diversify its earnings and asset base throughout FY19 which provided a strong foundation for the full-year earnings result.

Logistics and Ports & Bulk remain Qube’s largest underlying revenue drivers, contributing 34.9% and 44.7% respectively, while Infrastructure & Property (5.1%) and Patrick (15.3%) were also material contributors in FY19.

In terms of the balance sheet, the majority of Qube is tied up in its Operating Division (46.2%) while Infrastructure & Property (31.5%) and Patrick (19.6%) are also significant assets.

However, it wasn’t all good news for Qube with management citing challenging industry and macro trends as a slight drag on earnings for FY19.

Management cited slowing 12-month rolling container trade growth and weaker exports of Australian grains as two factors, while sliding China GDP figures are a warning sign for FY20 growth.

Foolish takeaway

While statutory numbers were softer for Qube, the underlying results appear quite solid and reflect a positive 12 months for the Aussie logistics group.

Qube recently acquired mining services group LCR Group for $135 million and is still adjusting to its newly-added operations, meaning there is potential for further synergies to be realised in FY20.

While there are potential headwinds looming ahead, I think the result justifies the positive share price reaction we saw in yesterday’s trade.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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