Picture: Simphiwe Mbokazi
Picture: Simphiwe Mbokazi

Grindrod benefits from recovering global trade, earnings rise sharply

By Edward West Time of article published Aug 30, 2021

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Grindrod, the ports, terminal, logistics and banking group lifted headline earnings many times over to R345 million in the six months to June 30, from R23m at the same time last year.

This was off the 5 percent increase in revenue to R2.39 billion. Earnings before interest tax depreciation and amortization was up 33 percent to R779m.

The group incurred a loss of R424m, mainly due to the fair value losses and impairments, against a prior period loss of R238.5m. Headline earnings rose by 103 percent to R4.5m compared to a headline loss of R169.3m in the prior period.

The much improved performance is reflected also in the share price. The share fell 0.67 percent to R5.02 on midday Friday, but over 12 months the share price had increased 39.5 percent.

The group said operations recovered from the effects of the COVID-19 pandemic. Port, Terminals and Logistics had benefited from commodity demand. Grindrod Bank remained conservative in lending and maintained strong capital and liquidity ratios.

Port and Terminals reported a 15 percent increase in headline earnings due to stronger volumes at the Maputo port and the Matola terminal.

The coastal shipping, container depots and transport, and multi-purpose terminal businesses lifted earnings 60 percent on the back of strong citrus demand and mining mineral exports, whilst continually providing deep sea shipping lines with alternative solutions through the group’s network to alleviate challenges.

A resumption of production at the Balama graphite mine positively impacted the northern Mozambique performance, with volumes expected to ramp up in the second half of the year in line with global demand.

Grindrod's activities in the northern Mozambique liquefied natural gas project had ceased due to the suspension of the project at the beginning of April 2021. Austerity measures there resulted in impairments and provisioning of R75.7m.

Disposals of the Automotive and Fuel Carrier businesses were underway. This required the impairment of R260.9m.

Grindrod Bank focused on its client relationships and quality lending, ensuring it retained a strong liquidity and capital position. The focus on platform banking had generated growth in the number of new accounts.

Non-core asset sales were being pursued, but the market was difficult.

Grindrod sold its private equity assets resulting in proceeds of R176m, of which R163.7m was received by the end of the six months. Results included impairments and fair value losses of R301.7m. The carrying value of the private equity and property portfolio as at 30 June 2021 was R983.3m.

Of remaining private equity assets, two material investments had not produced acceptable offers. The strategy remained to exit the investments at the right valuations.

Progress has been made by the owners on the development plan for the properties on the KwaZulu Natal North Coast. Interest in various nodes within this development had continued and the owners were in the process of launching the prospectus. The strategy remains for Grindrod to have these exposures settled.

BUSINESS REPORT

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