Qube Holdings Ltd (ASX:QUB) Full Year 2025 Earnings Call Highlights: Strong Financial ...

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Revenue Growth: Operating division revenue increased by 27% due to grain trading. EBIT Growth: Operating division EBIT grew by 17.4%. Logistics and Infrastructure Profits: Increased by approximately 20% with a 1.5% margin improvement. Ports & Bulk Profits: Profits up 10% with a 0.6% margin increase. Group Underlying EBITDA: Increased by 18.5% over the prior period. EBITDA Margin: Excluding grain trading, increased to 10.5%. Underlying NPAT: Delivered $288 million, a 6.2% increase over FY24. Final Dividend: $0.057 per share, fully franked, payable on October 14, 2025. Full-Year Dividend: $0.098 per share, a 7.1% increase over FY24. Net CapEx: $561 million, with $453 million on M&A. Net Debt Increase: Circa $403 million. Gearing Ratio: Increased to 33%, at the midpoint of the Board's approved range. Cash Conversion: Excluding grain trading working capital, was 87%. Return on Average Capital Employed: On track towards a revised target of at least 12%.

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Release Date: August 21, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Qube Holdings Ltd (ASX:QUB) delivered a solid full-year result with growth across all underlying performance metrics, demonstrating resilience and financial strength. The company's safety performance improved, with a 14% decrease in TRIFR and all internal leading safety targets achieved or exceeded. The Logistics and Infrastructure division saw profits jump by 20%, with overall margins increasing by 1.5% due to new business wins and productivity efficiencies. The Agri business made a significant contribution to earnings, with bulk exports doubling to over 3 million tonnes and throughput across grain facilities reaching 750,000 tonnes. Qube Holdings Ltd (ASX:QUB) maintained a strong financial position with a gearing ratio at 33%, and no refinancing requirements until FY28, supported by a $600 million issuance of senior unsecured notes.

Negative Points

The Resources business faced challenges due to mine suspensions and adverse weather events, impacting profits in the second half of the year. The MITCo joint venture faced difficulties, leading to a $219 million impairment related to the Moorebank interstate terminal asset. Automotive revenues were down due to a reduction in storage volumes and the impact of industrial action. Net finance costs increased by $22 million due to higher average debt balances and base interest rates. The AAT division performed weaker due to a reduction in storage and ancillary services, and delays in acquisition approvals.

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Q & A Highlights

Q: Can you confirm if the CapEx guidance includes M&A, and provide clarity on the expected EBITDA growth for FY26? A: Yes, the CapEx guidance does include some M&A. The number could be lower if there is less M&A activity. Regarding EBITDA growth, we are not providing specific quantitative guidance beyond what has been shared. However, the outlook suggests solid growth, potentially higher than the 6% seen in FY25. - Mark Wratten, CFO

Q: What is the impact of higher net interest costs expected in FY26, and how have proceeds from the Minto sale been utilized? A: The higher net interest costs are primarily due to increased debt levels from acquisitions and CapEx. Although interest rates are decreasing, the overall debt level remains high. Proceeds from the Minto sale have been offset by these expenditures. - Mark Wratten, CFO

Q: Regarding Patrick's conservative gearing, are there any plans for capital management changes within Patrick's vehicle? A: Patrick's conservative gearing is a strategic decision agreed upon by both shareholders, Qube and Brookfield. There are no current plans to change this approach, and distributions from Patrick will continue to be a significant cash flow item. - Mark Wratten, CFO

Q: Can you provide details on the MIRRAT acquisition's earnings contribution and performance expectations for FY26? A: The MIRRAT acquisition is performing broadly in line with expectations, though slightly impacted by reduced storage and ancillary revenues. For FY26, we expect earnings to align with the annual report's indication of $66 million in revenue and $21.6 million in EBITDA. - Paul Digney, Managing Director

Q: What is the outlook for asset sales in FY26, and can you provide details on the tax implications? A: Asset sales are projected to be between $120 million and $140 million, including rolling stock sales. Specific details on other assets are under negotiation and will be announced in due course. Tax implications, such as capital gains tax from the Minto sale, are still being assessed. - Mark Wratten, CFO

Q: Are there any impacts from the safeguard mechanism on Qube's operations? A: Currently, Qube is not impacted by the safeguard mechanism as none of our business units reach the threshold. However, we are monitoring the situation closely. - Paul Digney, Managing Director

Q: What are the implications of stepping back from the Olympic Dam project, and are there any associated one-off costs? A: The decision to step back from Olympic Dam was strategic, allowing asset redeployment to other projects. There are some impacts on FY26 guidance, but these are accounted for in our projections. - Paul Digney, Managing Director

Q: Can you provide insights into the growth and maintenance CapEx profile for FY26? A: The growth and maintenance CapEx profile for FY26 is expected to be similar to FY25, with a balance between organic growth and acquisition opportunities. - Mark Wratten, CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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