Grindrod's interim earnings grew by 26% for the six months ended June 30, 2023, supported by continued strong demand for its logistics solutions through its cargo terminal infrastructure footprint and complementary logistics service offerings.
In its interim results ended June 30, 2023, the Ports, terminals, and logistics operator said on Friday that Maputo port volumes increased by 30% compared to the prior period, resulting in a record performance of 5.9 million tonnes exported during the period.
Grindrod’s Mozambique dry bulk terminals in Maputo and Matola handled 6.0 million tonnes, up 17% on the prior period.
Grindrod is collaborating with Transnet Freight Rail and Mozambique Port and Railways (CFM) on the ongoing initiative to move cargo on trains running seamlessly between South Africa and Mozambique, which it said would improve train turnaround time and benefit export customers
The group reported a 32% increase in revenue from core operations, compared with the same period last year, to R3.8 billion.
Revenue from non-core operations, which were proving more challenging to dispose of than anticipated, came at R7.2bn.
Trading profit from core operations was up 16%, to R1.1bn.
Cash-flush Grindrod increased its interim dividend by 100% year on year to 34.4c per share, making for a total shareholder payout of about R147.2 million.
Recently appointed CEO Xolani Mbambo told Business Report that the group doubled its dividend declaration compared to the first half of last year.
“We looked at our liquidity position. We're sitting with more than R2bn of cash. You will remember that last year, we sold our bank business to African Bank for R1.5bn. So we still have that amount of cash after we paid a special dividend last year.
“In addition to that business itself, operationally, we are sitting with R1.1bn of cash. But in addition to that, our balance sheet can raise more debt if we so wish. If you add the headline earnings growth and capital growth, then we had no choice but to say we can be a bit relaxed on a dividend,” he said.
Mbambo said the positive side of the results was that the group achieved earnings growth in its core business.
“We’ve also achieved strong capital growth, and this is all on the back of good volumes in Maputo. Good performance in Northern Mozambique, solid performance out of clearing and flooding and ships businesses, as well as, improving performance in our container business in South Africa.
“We do have some areas where we need focus, particularly in Richards Bay. It is giving us a challenge,” he said.
Mbambo said the the reason Grindrod achieved these volumes was because of the help it received from Transnet because the rail corridor, North East corridor running in Maputo and Matola was run by Transnet together with CFM.
“Whilst there are problems in South Africa to an extent logistically, the reality though is that the North East corridor for Transnet, as well as CFM, is one of the profitable corridors for them.”
He said he wouldn’t say the boom in Grindrod business ws because of Transnet woes.
“I wouldn’t say that their pain is our gain. It’s not necessarily so, but it’s the corridor that has got rail in which they operate. And for them, it makes business sense to also send a rolling stock through that line. But I think what's better is that we try hard to improve the turnaround time with the limited rolling stock that we currently have.
“The conversation between Transnet and CFM in Mozambique is a positive one, where they look at how they can unlock the delays at the border so that those trains continue to flow,” he said.
Looking ahead, Mbambo said Transnet had started to work on restoring the conveyor belt in Richard’s Bay, which had been down since the fourth quarter of 2021.
“We are very positive about the outlook. We’re just hoping that the commodity prices can keep up,” he said.
The share ended up 4% at R10.40 on Friday.
BUSINESS REPORT