Qube Expects $10-$20 Million EBITA Impact from Geopolitical and Weather Events in FY26

• Estimated $10-$20 million EBITA impact from Middle East conflict
• Additional $3-$5 million EBITA hit from adverse weather in Australia and New Zealand
• Fuel cost recovery delays and lower export volumes are key drivers
• Logistics & Infrastructure segment most affected, Ports & Bulk less so
• MAM Scheme process remains on track despite earnings uncertainty

Geopolitical Tensions Weigh on Earnings

Qube Holdings Limited (ASX:QUB) has revealed that the ongoing Middle East conflict is expected to dent its FY26 earnings before interest, tax and amortisation (EBITA) by between $10 million and $20 million. The logistics and infrastructure arm is bearing the brunt, while the ports and bulk division faces a more muted impact. This follows a period of relative operational stability, thanks to Qube’s diversified portfolio and robust supply agreements, including with two major Australian fuel suppliers.

The earnings hit largely stems from temporary factors: higher fuel costs that are yet to be fully passed on to customers due to timing lags, and reduced export volumes in agricultural and forestry sectors caused by elevated shipping costs and restricted vessel access to Middle Eastern markets. Qube anticipates these headwinds will ease in FY27, assuming a resolution to the conflict and a reduction in fuel prices.

Weather Events Add to Operational Challenges

Compounding the geopolitical strain, Qube’s FY26 underlying EBITA has taken an additional $3 million to $5 million hit from severe weather disruptions in Australia and New Zealand during the third quarter. Cyclones forced operational shutdowns in parts of Western Australia, notably affecting the Ports & Bulk operations, while flooding in New Zealand’s forestry regions curtailed volumes. These events underscore the vulnerability of logistics operations to climate-related disruptions, even as Qube’s markets have historically demonstrated resilience through economic cycles and prior shocks.

Despite these setbacks, Qube’s management remains confident in the medium to long-term growth prospects of its markets, noting that major disruptions often prompt customers to increase inventory holdings and value reliable logistics partners more highly. This dynamic could benefit Qube’s business model as supply chain strategies evolve.

Outlook and Strategic Positioning

Qube continues to forecast underlying earnings growth in FY26, though the extent remains uncertain due to fluctuating fuel cost recoveries and potential shifts in customer activity linked to the geopolitical environment. The company emphasises that much of the current earnings pressure is non-recurring and likely to reverse in FY27 if the conflict subsides.

Importantly, the revised earnings outlook does not affect the ongoing takeover scheme with the Macquarie Asset Management-led consortium. The parties are progressing towards necessary approvals in line with the timetable set out in Qube’s February announcement. This follows Qube’s recent strong half-year performance, which saw a 12.9% revenue increase and a major acquisition deal, highlighting the company’s growth trajectory despite current headwinds.

Qube’s ability to leverage its extensive logistics network and contractual safeguards, alongside its exposure to alternative energy projects, positions it to navigate these challenges. However, the near-term earnings forecast remains clouded by uncertainty around the duration and severity of the geopolitical conflict and weather disruptions.

Bottom Line?

Qube’s FY26 earnings face tangible but likely temporary pressure from fuel cost lags and export slowdowns, with recovery in FY27 hinging on geopolitical developments.

Questions in the middle?

• How quickly can Qube pass through higher fuel costs to customers amid supply chain volatility?
• Will ongoing geopolitical tensions prolong shipping disruptions beyond FY26?
• Could adverse weather patterns increasingly challenge Qube’s operational resilience?