300614 Transnet Chief executive (L) Brian Molefe charting to the companyChief Financial officer Anoj Singh at the company annual results in Sandton Johannesburg.photo by Simphiwe Mbokazi 453

Johannesburg - Transnet was starting to make gains from its rail freight unit as it recorded an increase in volumes of minerals, containers and vehicles transported by rail, the state-owned logistics and transport utility said yesterday.

For the year to March, Transnet managed to grow its revenue by 12.8 percent to R56.6 billion. The parastatal said revenue growth was driven by a 14.2 percent increase in mineral and chrome volumes, in addition to a 25.2 percent rise in automotive volumes and containers moved by rail.

“The latter confirms the strides the rail freight unit is making in gaining market share through its focus on road-to-rail migration,” the logistics group said.

Transnet Freight Rail contributed about 50 percent to the group’s total revenue. Rail has been the main focus of the company’s seven-year capital investment programme.

Transnet had previously said 65 percent of the R300bn-plus capital investment programme would be spent on beefing up rail capacity.

The group’s profit jumped 24.9 percent to R5.2bn from R4.14bn a year earlier. Group chief executive Brian Molefe noted: “It’s the first time that our profits are above R5bn.”

The group said the capital investment programme, which was currently in its third year, had been increased from R307.5bn to R312.2bn. Capital expenditure for the period under review increased by 15.6 percent to R31.8bn.

“The company spent an unprecedented R31.8bn on revamping and mordernising its rail, pipeline and ports network, taking the total since 2010 to a record-breaking R121.5bn, the majority of which has been on freight rail,” Transnet said.

However, the group said rail volumes for its heavy haul lines dedicated to coal and iron ore declined marginally year on year. The export coal line was hampered by a number of factors, including a 33-day strike by workers belonging to a breakaway union, a municipal power supply disruption at the Richards Bay coal terminal and a longer-than-anticipated annual maintenance shutdown. The coal line transported 83.1 million tons, down from 84.3 million tons last year.

“These challenges were mitigated by the partial introduction of the 200-wagon Shongololo train, which, once fully operational, will result in significant productivity gains,” the company said.

Molefe added that Transnet was also affected by the price of coal. “That caused suppliers to hold back on supply of coal.”

Prices of the fuel delivered to north-west Europe from Richards Bay declined 15 percent to an average of $77 (R815) a ton in the period.

Earnings before interest, tax, depreciation and amortisation grew 12.3 percent to R23.6bn from R21.1bn in the previous period.

Port container volumes increased by 6.3 percent, while petroleum pipeline volumes were up 4.4 percent. Operating costs saw an overall increase of 13.1 percent to R33bn, with energy costs rising by 10.3 percent, driven by higher electricity and fuel prices.

The group managed to raise R22.4bn from the market and repaid R8bn. It raised R5.8bn from domestic bond issues, R5bn from a global medium-term note issue and R4bn from call loans, among other sources.

At year-end, the company’s gearing ratio stood at 45.9 percent, “reflecting ongoing capacity to raise funding for the infrastructure investment programme, and comfortably within the self-imposed ceiling of 50 percent”, it said.

Transnet added that it had raised funding on the strength of its financial position without government guarantees. – Additional reporting by Bloomberg