Transport corridor and logistic services group Grindrod is recording robust growth so far into the second half of its financial year, after strong freight volume growth boosted first half profit, CEO Andrew Waller said.
The group swung around to a R385.2 million profit in the six months to June 30 from a R424m loss in the prior period, and has restored an interim dividend payout.
Headline earnings increased 53 percent to R529m, while cash generated from operations increased 120 percent to R336m. An interim dividend of 17.2 cents was declared.
The ports, terminals and logistics corridor operator said the good results were underpinned by strong mineral commodity markets, while Grindrod Bank performed well on the back of favourable net interest margins.
“With the high commodity prices, all the exporters were trying their best to get as much out to their export markets as possible,” said Waller.
Apart from the group’s core operations, Grindrod’s management are also exploring options to recover significant loans advanced to KwaZulu-Natal North Coast property owners.
The loans amounted to about R1.8 billion, and the land upon which the loans were granted to an Illovo Sugar black economic empowerment (BEE) consortium led by Dr Patrick Sokhela, was last valued at around R3bn, said Waller.
Grindrod’s Port and Terminals unit grew earnings 164 percent due to an increase in volumes handled. Maputo port volumes grew 30 percent.
The dry bulk terminals grew volumes handled by 52 percent despite various disruptive challenges.
The coastal shipping and container depot businesses grew earnings 88 percent despite a challenging operating environment.
The Northern Mozambique graphite operations and Clearing and Forwarding business delivered solid results. Grindrod's rail business showed an improvement in locomotive deployment.
Group earnings before interest, tax, depreciation and amortisation increased 37 percent to R1.07bn.
Grindrod Bank grew its earnings underpinned by the higher interest rate environment. Grindrod Bank's capital adequacy ratio is in line with compliance requirements and its credit loss ratio at 48 bps is below the levels of 2021.
The sale of non-core assets continues. Management was working 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. In early April 2022 the fuel carrier fleet in Botswana was disposed of, marking Grindrod's exit from the fuel and automotive carrier businesses.
The joint venture between Maersk Logistics and Services operations, certain of Grindrod's container depots and its coastal shipping business was approved by the Competition Commission on May 24.
The disposal of Grindrod Bank to African Bank for R1.5bn was ongoing.