Johannesburg - Transnet said first-half profit fell 25 percent after finance costs rose and the South Africa’s state-owned ports and rail operator’s writedowns of older equipment more than doubled.
After-tax profit decreased to 2.14 billion rand in the six months ended September 30, compared with 2.85 billion rand in 2013, the company said in a presentation handed to reporters today.
Finance costs increased 18 percent to 3.23 billion rand, while impairments advanced to 719 million rand from 288 million rand.
Post-tax profit was lower “as result of increased borrowing,” chief executive Brian Molefe said.
“We are not concerned because we are in a phase of the company where we are adding capital stock.”
Transnet is two years into a seven-year, 312.2 billion-rand program to improve rail links and port capacity in South Africa, the continent’s second-biggest economy.
The Johannesburg-based company is financing the investment by tapping local and foreign debt markets.
Transnet last month signed a 10-year, 24 billion-rand deal with BHP Billiton to transport coal to the country’s ports for export.
The company is confident that agreements with its remaining 28 coal customers will be signed by the end of November, Molefe said last month.
Other miners include Glencore and Exxaro Resources.
Coal Lines
South Africa is the continent’s biggest coal supplier, with most production in the eastern Mpumalanga province, where reserves are declining.
Companies are now developing the largely untapped Waterberg Basin in the northern Limpopo province, which contains about 75 billion tons of coal, or 40 percent of South Africa’s resources, according to state power utility Eskom.
Coal-line volumes increased 4.3 percent to 43.7 million metric tons, while automotive and container volumes on rail were 14 percent higher than a year earlier, Transnet said in a statement.
The company forecasts a 9 percent advance in coal deliveries in the year to March.
Exports of iron ore and manganese, both steelmaking ingredients, rose 4.8 percent to 32.9 million tons, it said.
South Africa has the world’s largest known reserves of manganese and is the biggest producer.
Earnings before interest, tax, depreciation and amortisation climbed 6 percent to 12.8 billion rand.
Revenue advanced 6.4 percent to 30.3 billion rand, the company said.
Capital investments rose 67 percent to 18.7 billion rand, while cash generated from operations after working capital charges increased 57 percent to 17.7 billion rand. - Bloomberg News