JSE-listed bulk handling and shipping group Grindrod boasted good growth in the majority of its business divisions for the year ended December 31, 2012, with attributable income up 61% to R853.3-million and headline earnings climbing 22% to 121.9c a share.
During what CEO Alan Olivier described as a “healthy” year, the group generated cash from operations of R1.4-billion and declared a final ordinary dividend of 15.4c a share – up 28% from 12c a share for 2011.
A 5% decrease in revenue from R37.05-billion to R35.2-billion was chiefly the result of the disposal of the group’s marine fuels business and lower agricultural commodity freight volumes.
“Grindrod embarked on a significant amount of corporate action during the year, with several joint ventures, mergers and acquisitions in our energy, freight and shipping businesses,” said Olivier, adding that this was aligned with the company’s strategic expansion plans.
The group observed increased demand in commodities, particularly iron-ore and coal, which drove continued growth in seaborne freight. However, an oversupply of shipping capacity in the market remained a challenge and narrowed margins for Grindrod’s shipping business.
The division was the only one to realise a loss for the year of R169.7-million. R173.3-million of impairments on vessels contributed to the loss.
Olivier said the company would, however, progress its proposed expansion plans through the chartering of ships and the purchase of eco-efficient ships, expecting to see growth in demand for tankers and improved freight rates in 2013.
“While the transport business has been an underperforming division over the last few years, this is expected to strengthen as volumes improve and benefits are extracted from operations,” he commented.
Meanwhile, the freight services business increased its earnings by 150% to R793.3-million for the period, on disposal of 35% shareholding of the Maputo Coal Terminal to energy trader Vitol.
Grindrod started construction of a permanent 20-million-ton capacity intermodal container facility at the Port of Maputo last year. The $780-million project would enable the port to accommodate ships with 80 000 t capacity and was expected to be completed by the end of 2016.
Further, earnings for the trading division increased by 12% to R113.5-million, along with a 17% increase in operating margins to $3.90/t, with the marine fuels business performing well through improved volumes, improved margins and changes to the product mix.
The financial services division earnings followed this upward trend, increasing by 11.5% to R65.1-million from R58.4-million in 2011.
Looking ahead, Olivier said the group would continue its focus on developing a larger freight and transport business by investing in infrastructure opportunities with high barriers to entry.
“We are well positioned to take advantage of demand for operators in the logistics sector on the continent and we will carefully look to invest in shipping markets in the Southern African region and, potentially, further afield,” he noted.