Transnet details ‘perfect storm’ that saw significant decrease in company revenue
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DURBAN - TRANSNET has pointed to a number of factors triggered by the Covid-19 lockdown for a perfect storm that saw its revenue decrease significantly for the six months ended 30 September.
The state-owned freight and rail company on Friday reported that revenue declined by 17.3 percent to R32 billion compared to the same period last year.
Transnet’s earnings before interest, taxes, depreciation, and amortization (Ebitda) fell by 43.7 percent to R9.8bn with the Ebitda margin decreasing to 30.8 percent in the same period.
The group said the general slowdown in economic activity saw a decline in performance of key sectors, including mining and manufacturing.
Its revenue was adversely affected by lower demand in rail, container and petroleum volumes on the back of limited economic activity during the strict lockdown.
“This resulted in the 16.4 percent decline of rail and 20.7 percent port volumes for the period, when compared to the same period in the previous year,” Transnet said.
South Africa’s economic growth fell 51 percent in the second quarter before rebounding by 66.1 percent in the third quarter.
The manufacturing and mining industries have both continued recording consecutive months of negative growth, since May when the country was still under severe restrictions.
Transnet said bulk terminals were operating at reduced capacity during the initial hard lockdown, that weighed heavily on the exports of iron ore, manganese and chrome.
Container terminals were equally impacted during the same period.
“After the initial hard lockdown, output was adversely impacted by regulations that prohibited
mines from operating at full capacity in the interest of ‘flattening the curve’ and protecting the safety of workers,” it said.
However, as restrictions began to ease and demand rebounded, Transnet said it experienced month-to-month improvements in performance across key indicators.
During this period the group focused operations on moving essential cargo, decongesting the ports, operationalising container terminals and ports, as well as, essential rail corridors.
The group said it had started to see improvements in its performance in the second half of the year, as a result of growing demand and a rebound in economic activity.
Transnet raised R11.1bn in long-term funding for the period from bank loans, development finance institutions and bonds, on the strength of its financial position without government guarantees.
The gearing ratio increased to 48.7 percent mainly due to the impact of net property, plant and equipment devaluations for the period, and is within the triggers in loan covenants.
Looking ahead, Transnet said it would continue to focus its attention on ensuring its employees operate in a safe environment, while delivering to its customers as a second wave of the pandemic emerges.