Johannesburg - South African shipping company Grindrod has slipped into a loss as demand for shipping remained under pressure due to the recent commodities rout.
In the six months to June, it says its earnings before interest, tax, depreciation and amortisation came in at R299 million - down from last year’s R943 million. This is as revenue dropped from R5 billion to R4.65 billion.
It reported a headline loss per share of 50.8 cents compared with a gain of 43.6 c a year ago as it reversed its previous profitable position to make a headline loss of R381.1 million compared to profit of R327.9 million.
In its commentary, it said low global growth continued in the first half of 2016, resulting in low commodity prices and shipping rates.
“The board and management remain focused on mitigating the adverse impacts of subdued market conditions on business performance and retaining shareholder value.” As a result, it has decided to sell the locomotive assembly business.
It has also needed to raise an impairment of R675.3 million in the rail businesses because of the depressed state of the market.
The impairment includes R379.1 million in goodwill and intangible that arose on the empowerment deal concluded in 2014.
Grindrod says the decline in dry bulk shipping reached unprecedented levels in the first quarter, and the market has yet to recover.
The persistent decline in dry-bulk shipping rates continued through the first quarter reaching unprecedented levels. The subsequent recovery of the market
“All dry-bulk ship-owning sectors have been loss-making in the current period, despite good employment and the inclusion of 17 third-party owned ships in the IVS handysize commercial pool.”
Tanker shipping rates slid in the second quarter following weaker demand and delivery of newbuildings.
It says its ship operating units, including the coastal tanker and bunker barges performed well, and port earnings held well, despite a 23 percent drop in volumes.
With the exception of its agricultural unit, its logistics business held up, it says.
Its profit was also impacted by a net foreign exchange loss of R76.5 million.
IOL
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