Jul 10, 2012
Too early to review R300bn capex plan despite poor economic outlookBack
Port|CoAL|Efficiency|Engineering|Export|Pipelines|Ports|rail|Road|Transnet|Transnet Port Terminals|Service|State-owned Freight Logistic|Brian Molefe|Iron Ore|Iron-ore
© Reuse this
CE Brian Molefe stressed, though, that the investment plan would not immediately respond to cyclical changes, owing to the fact that the programme was designed to cater for the growth of the business over a 30-year horizon.
Therefore, even under a worst-case scenario Transnet would continue to invest, with a “stress test” having indicated that, at most, R50-billion would be lopped off the capex plan should there be a period of sustained low growth.
In 2011/12, the group spent a record R22.5-billion, which was 3.7% up on the R21.5-billion invested in 2010/11. However, it was below the budget of R25-billion set for the period.
Molefe said the group still planned to invest a record R31.2-billion on railways, ports and pipelines during the current financial year, notwithstanding weaker market conditions in a number of areas.
Under the plan, capex was poised to rise steadily to a peak of R56-billion in 2016/17 and be funded through a combination of internal cash flows, as well as debt funding of about R85.5-billion.
“Whether we revise it as a result of market conditions it is still too early to say,” Molefe said, adding that, should conditions change materially, it would respond by either decreasing or adding to the programme.
“But what you must remember is that this capex programme is not about short-term cycles in markets. It’s a long-term capex programme, a 30-year capex programme, that we will try and execute in seven years.”
Transnet Freight Rail (TFR) was poised to absorb the lion’s share of R201-billion, followed by Transnet National Ports Authority (R47-billion), Transnet Port Terminals (R33-billion), Transnet Pipelines (R11-billion) and Transnet Rail Engineering (R4-billion).
The objective was to facilitate a dramatic increase in volumes across its businesses as well as support a transition from road to rail.
During 2011/12, rail volumes breach the 200-million-ton level for the first time on the group’s history, with general freight volumes rising 9.9% to 81-million tons, export coal volumes increasing by 8.8% to 67.7-million and iron-ore volumes surging 13.2% to 52.3-million tons.
The number of containers moved by rail increased 21.5% to 762 760 twenty-foot equivalent units (TEUs), from 627 825 TEUs, which allowed TFR to growth its market share to 34% from 30.9% in 2010/11.
At the ports, Transnet Port Terminals increased average moves per gross crane hour (GCH) by 8.1% to 26.6 GCH from 24.6 GCH in the previous period, which Molefe likened to a golfer improving his or her handicap by one stroke. “It may look trivial . . . [but] it takes a whole lot of activity to play just one shot less than the last time.”
Group revenue rose 20.9% to a record R45.9-billion, while earnings before interest, taxes, depreciation and amortization increased by 19.8% to R18.9-billion. However, profit for the year was lower at R4.12-billion, from R4.2-billion in the previous financial year, owing to higher depreciation, taxes and finance costs.
Molefe said the performance set a solid platform for Transnet to execute its R300-billion market demand strategy.
However, Public Enterprises Minister Malusi Gigaba called on the group’s board to address the area of customer service as a matter of priority, saying it impinged on the country’s global competitiveness.
“Notwithstanding the positive financial results I remain concerned about the enduring efficiency challenges within ports and rail, most notably the General Freight Business,” Gigaba said in a statement.
“It would be a fair expectation that considerable gains in efficiencies and volumes should have been achieved following the substantial R94.7-billion capital expenditure programme over the last five years.”
Significant emphasis should be placed on the area of customer service, with Gigaba describing the current quality of service as “unsatisfactory”.
He said customers remained unsatisfied about “high tariffs, unreliability, unpredictability and operational inefficiencies”.
“As the shareholder representative of this company, we have once more reiterated and underscored Transnet’s mandate to lower the cost of doing business,” Gigaba said.
Edited by: Creamer Media Reporter© Reuse this
To subscribe email email@example.com or click here
To advertise email firstname.lastname@example.org or click here
Other Construction News
Recent Research Reports
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
Energy Roundup – February 2016 (PDF Report)
The February 2016 roundup covers activities across South Africa for December 2015 and January 2016 and includes details of a Government Gazette notice that confirms Cabinet’s decision to move ahead with the 9 600 MW nuclear procurement programme; State-owned power...
Energy Roundup - December 2015 (PDF Report)
The December 2015 roundup includes details of State-owned utility Eskom’s application to claw back R22.8-billion; South Africa’s ranking as an investment destination for renewable energy; and a nuclear expert’s thoughts on reactor designs for South Africa’s nuclear...
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
This Week's Magazine
Lifting, transporting, installing and ballasting solutions provider Ale has expanded its global fleet of trailers and invested in the latest range of widening trailers that can be mechanically widened from 3 m to the desired width for any project. Ale ordered 48 axle...
The market for the BMW 7 Series in South Africa differs quite significantly from the rest of the world. China, the US and the Middle East almost exclusively buy the long-wheel-base version, using the German manufacturer’s luxury high-end sedan as a chaffeur-driven...
January new-vehicle sales fell by 6.9%, to 48 615 units, compared with the same month last year. Statistics released by the Department of Trade and Industry show that the domestic new passenger-car market declined by 6.1%, to 34 936 units, compared with 12 months ago.
Information technology (IT) equipment and infrastructure multinational Dell is providing open infrastructure systems for clients so that they can use any systems, including innovative new systems, that suit their business needs, says Dell Europe, Middle East and...
South Africa’s State-owned defence industrial group, Denel, has set up another international partnership, based in Hong Kong. This new subsidiary is Denel Asia and it is a joint venture (JV) with South African private sector company VR Laser.