Shipping and logistics group Grindrod’s attributable loss widened to R1.9-billion for the 2016 financial year, from a loss of R1.43-billion in 2015, as a result of depressed market conditions in the first half of the year and impairments in its Shipping and Freight Services Rail businesses.
Earnings before interest, taxes, depreciation and amortisation for the reporting period more than halved compared with the 2015 financial year, dropping from over R1.09-billion to about R469-million.
The company also reported a headline loss of R459.5-million, compared with earnings of R558.82-million the year before. Grindrod CEO Alan Olivier noted that the headline earnings were impacted on by net foreign exchange losses of R138-million, arising primarily from Grindrod’s operations in Mozambique and its investments in the UK.
He pointed out that business performance had improved in the second half of the year, owing to growing demand, supported by improved commodity prices.
Improved demand in the second half of the year was reflected in Grindrod's dry-bulk terminal use, which increased from an average 41% in the first half to 69% in the second half of the year.
The dry-bulk shipping rate had dropped owing to historic lows in the first half of 2016, but subsequently recovered owing to increased dry-bulk commodity demand, and increased market opportunities owing to a significant number of competitor’s vessels being scrapped and a slowdown in their new-build deliveries.
Grindrod’s rail manufacturing businesses continued to experience constraints with the cancellation of planned capital investments in mining projects in Africa.
Given the subsequent anticipated inability to secure the desired, sustainable return in these businesses, the company’s strategy was reviewed and a decision was taken to withdraw from the rail manufacturing businesses, resulting in further impairments of R644-million across its rail businesses.