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Grindrod reports solid progress in executing various strategies

6th December 2021

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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JSE-listed Grindrod continues to focus its efforts on executing the Port and Terminals, Logistics and Bank strategies and disposal of noncore businesses, it notes in a pre-close business update.

Its Port and Terminals segment has reported healthy volume growth with record performances in the third quarter.

The Coastal Shipping and Clearing and Forwarding businesses in the Logistics segment have performed well despite the congestion at South African ports.

The Bank segment focused on quality lending and maintained compliance with its capital and liquidity ratios.

Proceeds from the disposal of noncore assets were applied to settle private equity debt of R350-million, with a further R100-million to be settled by the end of the year.

PORTS

The Maputo port’s third-quarter performance of 6.4-million tonnes was higher than the preceding quarters.

Delays at the Komatipoort border are slowing down the improvements in the use of its increased berth and chrome and ferrochrome slab capacities. 

Progress on streamlining the border is under way with both the South African and Mozambican governments contributing to an enhanced solution for cross-border traffic.

Additional rail allocation to the port is also being sought to maximise use of the port’s increased rail capacity.

Terminals experienced a healthy increase in customer demand for its capacity to handle magnetite and coal exports, and the Matola terminal and Maputo dry-bulk facility met this demand, with the Matola terminal handling a record volume of one-million tonnes in September with volumes of 7.4-million for the eleven months ending November.

The Maputo Car Terminal continued to operate as a temporary storage solution for project cargo and experienced increased car transshipment volumes.

Performance at the Richards Bay terminal has been affected by a fire which impacted on the terminal’s ability to meet increased customer demand for coal capacity.

A contingent operation is now in place following collaboration between Transnet Port Terminals and port users.

LOGISTICS

The coastal shipping and container depot business achieved good growth as the container market continued a buoyant trajectory, with the remaining businesses delivering consistent performance for the period.

Logistics’ performance improved as the coastal shipping and container, and clearing and forwarding, businesses performed well despite congested ports in South Africa.

The coastal shipping business continues to assist shipping lines with alternative solutions to minimise delays on their deep-sea voyages and avoid potential demurrage costs as a result of port congestion.

The container depot business, in preparation for citrus season, increased reefer capacity, with the installation of further reefer points.

The clearing and forwarding business delivered solid results with the extension of key customer contracts. Grindrod’s shareholding increased to 50% following the business’s buyback of shares from its minority shareholder.

During the period, Grindrod concluded a joint venture, wherein the logistics activities of Grindrod’s Intermodal business will complement the current Maersk Logistics and Services operations.

During the second half of this year, the Balama graphite mine continued production and its volumes have been ramping up.

The Rail business redeployed eight locomotives at Sierra Leone’s Tonkolili mine following the resumption of the iron-ore mine in the region and successfully completed the disposal of four locomotives estimated at $11.3-million (Grindrod’s share is $4.8-million) to the Ugandan government.

BANK

Grindrod Bank’s lending and core deposit books increased to R8.9-billion and R10.8-billion as at the end of October.

The Bank remains cautious in its lending activities and retained a large surplus liquidity of R6-billion.

The Bank concluded an agreement with Shoprite Checkers as a key new platform partner.

The Bank restarted the project to raise further capital to enable growth and enhance returns.

During the period, Grindrod successfully executed the sale of its Grindrod Shipping shares reporting proceeds of R338.1-million.

Management continues to work with the Marine Fuels management and co-shareholder to exit this investment.

PRIVATE EQUITY

The disposal of the offshore real estate investment was concluded during September for £17.4-million. The strategy is to exit the remaining two investments at the right valuations.

Good progress has been made by the owners of the KwaZulu-Natal north coast properties. Grindrod’s loans into these companies remain high.

Net debt to equity, excluding Grindrod Bank, reduced following the repayment of debt with proceeds from disposals.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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