Qube share price bounces 6% as dividend delights

Investors are bidding up Qube shares today.

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Key points

  • Qube has reported its full-year FY22 results 
  • Revenue, earnings, and profit all grew 
  • Record full-year dividends of 7 cents per share 

The Qube Holdings Ltd (ASX: QUB) share price is gathering steam on Thursday after the logistics company handed in its full-year FY22 results.

The Qube share price opened 4.1% higher this morning and has continued to gain ground, up 6.1% at the time of writing.

Qube share price lifts as profit soars 

Here are the key takeaways from Qube's report for the 12 months ended 30 June:

  • Underlying revenue came in at $2.6 billion – up 27% compared to the prior corresponding period (pcp) of FY21
  • Underlying earnings before interest, tax, and amortisation (EBITA) leapt 21% on the pcp to $221.1 million
  • Underlying net profit after tax (NPAT) jumped 30% on the pcp to $185.7 million
  • A fully franked final ordinary dividend of 3.3 cents was declared
  • The board also declared a fully franked special dividend of 0.7 cents 

Qube reported underlying results to more accurately reflect the continuing operations of the business.

During the year, the company discontinued its property division and finalised the sale of its interests in the Moorebank Logistics Park (MLP).

Qube's special dividend was fuelled by this $1.7 billion sale, along with the company's positive earnings outlook.

The dividends declared today take the full-year total to a record 7 cents per share, fully franked. This puts Qube shares on a trailing dividend yield of 2.4%.

What else happened in FY22?

Qube achieved solid revenue and earnings growth in FY22 through organic growth in its operating division, margin improvement in the Patrick business, and the contribution from acquisitions.

The strong result also reflects higher volumes across most of the company's core markets, including containers, grain, steel, most mining bulk commodities, and general cargo.

Despite slightly reduced volumes, Patrick Terminals delivered NPAT growth of 32% as the business benefited from operational efficiency initiatives. Qube holds a 50% interest in the container terminals business.

During the year, Qube also completed a $400 million off-market share buyback. Shareholders cheered this decision at the time, sending the Qube share price higher.

What did management say?

Commenting on the results, Managing Director Paul Digney was upbeat, saying:

In FY22, the strength across most of our core markets including containers, grain, steel, most mining bulk commodities, energy and general cargo enabled Qube to deliver strong earnings growth despite weakness in certain markets and continued cost and operational impacts from COVID-19.

It also demonstrates Qube's ability to effectively mitigate cost pressures through scale, operational performance, and productivity initiatives, as well as through contractual mechanisms.

What's next?

Looking ahead, the Qube share price will be supported by management's expectations of continued strong growth in underlying revenue and earnings in its operating division.

Management is also anticipating strong growth in underlying earnings for Patrick. This will be driven by modest market growth, stable market share, and improved margins.

Encouragingly, Qube doesn't expect cost inflation to materially impact its earnings. The company is able to recover higher costs through a combination of contractual protections, rate adjustments, and productivity improvement.

Qube share price snapshot

Despite today's rise, the Qube share price has fallen 10% since the start of 2022. Zooming out further, the Qube share price has retreated 6% over the last 12 months.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has backpedalled 7% this year. And it's down 6% compared to this time last year.

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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