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Qube share price on watch as underlying profit slumps 15%

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The Qube Holdings Ltd (ASX: QUB) share price is on watch after the Aussie logistics company reported a 15% drop in underlying net profit after tax.

What does Qube do?

Qube is a diversified logistics and infrastructure company founded in 2010 and headquartered in Sydney.

The company is Australia’s largest integrated provider of import and export logistics services with national operations in over 125 locations.

Why is the Qube share price on watch?

This morning, Qube reported its full-year results for the year ended 30 June 2020 (FY20) headlined by underlying net profit falling to $104.2 million.

However, Qube generated 3% more revenue in FY20 totalling $1,902.0 million. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 1% higher to $290.9 million.

Positively, Qube’s diversified operations across ports, bulk and logistics operations helped to mitigate the impact of the coronavirus pandemic.

Qube’s Bulk operations continued largely unaffected by COVID-19 despite weakness in other markets.

Logistics revenue climbed 15.7% to $823.2 million while ports and bulk revenue increased 5.4% to $962.2 million. The remaining non-operating revenue came from its Patrick distributions as well as its infrastructure & property segment, and its corporate & other segments.

The group’s Moorebank Logistics Park is subject to NSW Government planning approvals. The new distribution centres are part of a billion-dollar automation push with Woolworths Group Ltd (ASX: WOW).

The Qube share price is one to watch after the company announced a 21% cut to its final dividend. Qube will pay a 2.3 cents per share (cps) fully franked dividend, down from 2.9 cps in FY19.

Including the 2.9 cps interim dividend, Qube’s full-year payment will be 5.2 cps – down 8.8% from last year.

Outlook

The Qube share price is worth watching after this morning’s full-year update.

Like many companies, Qube was unable to provide FY21 guidance given the current uncertainty.

The logistics group sees weaker conditions continuing into early FY21 until COVID-19 subsides. Qube expects lower volumes in “a number of its markets” to decline with earnings subject to the severity and duration of the pandemic impacts.

However, management said the company remains well-positioned for a strong earnings recovery once volumes stabilise.

The Qube share price remains down 10.2% for the year while the S&P/ASX 200 Index (ASX: XJO) has fallen 8.4% in 2020.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Woolworths Limited. 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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