JSE-listed freight and financial services group Grindrod on Wednesday said a renewed focus on freight services has yielded positive results for the 2018 financial year, following the unbundling of the shipping business in June last year.
The group noted that, while its repositioning is ongoing, the earnings growth generated by its financial services business was also pleasing.
The group achieved a 26% year-on-year increase in headline earnings to R716-million for the year ended December 31, 2018, compared with headline earnings of R570-million for the year ended December 31, 2017.
This translated to headline earnings a share of 95.3c, compared with 76c in the prior period.
Earnings before interest, taxes, depreciation and amortisation for the reporting period were R1.1-billion, compared with R943-million in the prior comparable period.
Grindrod reported a R217-million net profit.
Earnings from continuing operations for the period were R803-million, which was a 24% increase compared with earnings of R646-million achieved in the prior period. Earnings a share were 106.9c, compared with 86c in the prior comparable period.
Performance from total operations generated earnings a share of 378c, compared with a loss a share of 77.6c in the prior comparable period.
Headline earnings a share were 62c, compared with a headline loss a share of 47.4c in the prior comparable period.
The company declared a final ordinary dividend of 14.6c.
CEO Andrew Waller said revenue growth for the year was supported by its graphite contract logistics and government receipts from Zimbabwe.
Revenue, inclusive of joint ventures, was up by 16% to R24.6-billion, compared with R21.2-billion in the prior comparable period.
The Port of Maputo, in Mozambique, achieved record volumes of 19.6-million tonnes, which was a 7% improvement on the prior comparable period.
In 2019, the port is expected to increase its volume handling capacity with the completion of the rehabilitation works at Berths 6, 7, 8 and 9. The rehabilitation will not only create berths with a depth of up to 15 m, but will improve the occupancy rate of the berths by creating a larger mooring area.
The completion of the works has been scheduled for January 2020.
The port recently acquired two mobile harbour cranes and ancillary equipment to improve efficiencies.
The Matola terminal’s volumes reached 5.2-million tonnes in 2018, on par with that achieved in 2017. Despite a slow start to the year, volumes recovered during the second half of the year.
The Oiltanking Grindrod Calulo joint venture for the construction and development of the Ngqura liquid bulk terminal in respect of a build-own-operate-transfer agreement with Transnet is progressing. Funding arrangements are in progress and bulk earthworks have started.
Waller said that, despite a solid volume performance at the Maputo port, headline earnings for the port and terminals, at R145.6-million – compared with R179.8-million in the prior period – were undermined by relatively lower iron-ore prices, which impacted on the Matola terminal’s earnings performance.
Lower prices resulted in the commodity price participation benefit dropping to R4.6-million from R25.8-million in the prior comparable period.
Waller pointed out that the reporting period saw good dry-bulk terminal use, with a marked improvement in volumes handled during the second half of 2018.
In December, Terminal de Carvão da Matola Lda (TCM) reported a new loading record for the terminal of 580 214 t. The record loading rates demonstrated consistency to load at a rate of more than 7-million tons a year, confirming the terminal’s nameplate capacity.
TCM’s boom extension project, which started in January this year on ship loader one, will allow better use of the ship loader and allow the use of both ship loaders, which will improve vessel turnaround time.
During the first quarter of this year, TCM will also be commissioning Stacker Reclaimer 3 that is under rebuild. This will increase receiving and shipping capacity in line with the terminal’s current growth strategy.
Grindrod’s logistics division, meanwhile, expanded its footprint with the completion of a 60 000 m² cross-docking facility in Nacala in 2018. It is expected that, at full production, the Nacala facility will be containerising 30 000 t a month of bagged graphite.
A logistics contract for a graphite customer from the mine in Balama to the Port of Nacala started in June and steady ramp-up at the facility resulted in 79 600 t having been handled for the reporting period.
The logistics business generated headline earnings of R155-million, compared with R79-million in the prior comparable period.
The auto carrier business acquired 27 ha of land adjacent to the N3 highway from Gauteng to Durban for the development of a vehicle storage facility.
Further, Grindrod’s acquisition and integration of Novagroup strengthened the division’s position in the niche marine technical market and in container storage.
The agriculture business benefitted from the improved yields and the higher carry-over stock volumes, which ensured good handling and storage income.
Moreover, Grindrod delivered a strong performance from its UK property portfolio. The first phase of investments have been realised and re-investment will occur on a selective basis.
“The freight services division will continue to develop its facilities to enhance capacity and service offerings. The buoyant minerals market is expected to boost African trade, positively impacting on the operations.
“The financial services division reported solid results with an increase in earnings over the same period in the prior year. Core deposits (excluding retail) increased by 14% to R8.9-billion, compared with R7.8-billion in 2017. Advances grew by 8% to R7.8-billion, compared with R7.2-billion in 2017,” Waller noted.
He added that the freight services business was focusing on unlocking trade corridors and that the company would continue investing in strategic assets that enable efficient logistics chains at competitive prices.
The financial services business was focused on continued steady growth, developing a new retail business and increasing its focus on small and medium-sized enterprises in South Africa.