Grindrod benefits from strong commodity markets and increased traffic through Maputo

The coastal shipping and container depot businesses performed well under the challenging operational environment.

The coastal shipping and container depot businesses performed well under the challenging operational environment.

Published Aug 19, 2022


Grindrod saw good earnings growth in the six months to June 30 off the back of strong mineral commodity markets, good growth in volumes through Maputo port and favourable net interest margins at Grindrod Bank.

Its management predicted a surge in headline earnings to between R389 million and R419m from only R4m at the same time a year before.

Core headline earnings were forecast to increase by between 49 and 58 percent to between R514m and R544m.

Its Port and Terminals business achieved earnings growth of more than 100 percent compared with the prior six months, the group said in a trading statement yesterday.

Maputo Port volumes grew by 30 percent to 12.3 million tons. The port commissioned its upgraded berth infrastructure of six berths, raising capacity from 24.5 million tons in 2018 to 36.4 million tons.

The port spent $110.3m on chrome and ferro-chrome slab capacity expansion, rail offloading facility construction, port road infrastructure upgrade and berth rehabilitation.

Grindrod’s dry-bulk terminals grew volumes handled by 52 percent, despite disruptive weather challenges, frequent power outages, fire-damaged conveyor belt infrastructure in Richards Bay, and a loss of 20 vessel loading days in Matola due to its berth infrastructure incident.

The Matola terminal grew volumes 24 percent to 3.8 million tons compared to the prior period.

The Maputo terminal grew its volume throughput capacity by 25 percent to 3 million tons and handled 1.3 million tons compared to 41 thousand tons in the prior period. Volumes handled in Richards Bay grew 28 percent.

Grindrod’s Maputo Car Terminal volumes grew 35 percent against the prior period because of increased trans-shipments and higher domestic demand for the second hand vehicles.

The facility continues to benefit from project cargo storage.

The coastal shipping and container depot businesses performed well under the challenging operational environment.

All its container depot facilities in Durban were impacted by floods in April resulting in damages at carrying value of R51.4m, which had been impaired. Interim asset insurance claim proceeds of R100m were recorded. This will be used to replace damaged equipment and the infrastructure.

The 75 000 square metre container park development project in Denver, Johannesburg, where the group had spent R118.4m, was gaining momentum and on track to be completed in the second half of 2022.

The Northern Mozambique graphite operations and the Clearing and Forwarding business delivered solid results. Grindrod’s rail business showed an improvement in locomotive deployment.

Grindrod Bank reported healthy earnings growth underpinned by the higher interest rate environment. Grindrod Bank’s liquidity surplus at the end of June 2022 was R6 billion, which was achieving good yields under the current higher interest earning environment, resulting in no negative carry.

Grindrod Bank maintained a stable lending book of R8.3bn and achieved deposit book growth of 4 percent, to R11.7bn, compared to December 2021.

Marine Fuels earnings were up from the prior period due to the strong oil market. Management continues to work with the Marine Fuels management and co-shareholder to exit this investment.

The private equity portfolio exit is largely complete with only one significant asset remaining. Disposal proceeds of R152.1m realised during the current period were applied to settle private equity debt.

In early April 2022 the fuel carrier fleet in Botswana was disposed of, marking the completion of Grindrod’s exit from the fuel and automotive carrier transportation businesses.

The disposal of Grindrod Bank to African Bank for R1.5bn was ongoing, with all parties focused on fulfilling the conditions precedent.

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