CAPE TOWN – Grindrod, the terminals and trade corridor services group, reported an interim headline loss of 34.2 cents per share, a 92 percent decline, after once-off costs arose from the Covid-19 pandemic.
While the core business remained buoyant in the six months to June 30, Covid-19 specific actions resulted in once-off adjustments, including dividend withholding tax of R31.6 million on repatriation of undistributed profits of $27.9m (R470m) from Mozambique and a R90m mark to market adjustment on the Grindrod Shipping shares held.
The strength of the operations, however, was reflected in the 12 percent rise in trading profit to R464.9m, while cash generated from operations increased 40 percent to R507.4m in the six months to June 30. Debt to equity was low at 5 percent.
Port and Terminals operations reported good volumes through the Maputo Port and Matola Terminal. Matola Terminal volumes increased by 13 percent over June 2019. Infrastructure development (berth and slab rehabilitation) in Maputo Port was delayed by the pandemic, but was expected to be completed in the second half of the year.
Grindrod’s terminal facilities in Richards Bay continued cargo flows during the lockdown period and started sulphur rail shipments to Zambia. The rail bodes well for the strategic unlocking of the North/South corridor into and out of Richards Bay, which would attract additional cargo flows to Richards Bay port.
Investment in the Richards Bay facilities during 2019 and 2020 unlocked the bi-directional traffic flow of sulphur, copper concentrate and fertiliser as primary commodities.
The seafreight business and its land-side container operation achieved earnings growth of 30 percent compared to the same period in 2019. Container volumes peaked in the first quarter, with essential cargo shipments continuing during lockdown.
The container business acquired additional space in Port Elizabeth and a long-term tenure at its Maydon Wharf facilities in eThekwini.
To provide services to what was expected to become the world’s biggest LNG region, Grindrod increased its presence in Northern Mozambique. Despite many obstacles such as insurgency attacks, poor road infrastructure, and Covid-19 lockdowns, Grindrod established a dedicated delivery sea freight service to Cabo Afungi ex the main hub ports of Mocimboa da Praia, Pemba, and Nacala.
Rail logistics improved its performance in the first half of the year and volumes post the South African lockdown period showed an improvement as rail operators strived to reignite traffic on the North/South corridor. Locomotives and wagons were deployed on the Dar es Salaam corridor.
The road transport businesses were negatively impacted by reduced economic growth in South Africa, but improved market conditions were expected.
“During the second half, Grindrod will continue precautionary measures across all businesses in response to Covid-19, ramp up the development of assets, focus on efficiencies, and diversify across commodities, said chief executive Andrew Waller.
Grindrod shares closed 0.28 percent higher at R3.53 on the JSE on Thursday.
BUSINESS REPORT