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Grindrod responds to Covid-19 pandemic

6th April 2020

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Amid the global spread of the Covid-19 pandemic, JSE-listed Grindrod has established a task team to monitor the specific requirements and recommendations of governments and their health agencies in the countries in which it operates.

The task team has developed comprehensive response plans and has implemented the necessary actions focused on ensuring the health and safety of its employees.

Grindrod reports that the majority of its businesses achieved a strong performance for the first quarter of this year, with little impact on shipments of commodities to China and only a marginal impact in the container business on inbound shipments from the East.

The 21-day lockdown in South Africa, however, is now impacting on most of the group businesses in South Africa and in Maputo as trade flows have either ceased or are been severely impacted.

The group’s Port and Terminals businesses expect revenue to decline during April as a result of the lockdown in South Africa and the closure of the border with Mozambique.

The extent of the impact will depend on the duration of the closure of the South African mineral businesses and the flow of mineral cargo through the Mozambique border.

Early indications are that the government may allow some dispensation for the mines to continue operating under strict conditions once they have secured the necessary approvals.

This may mitigate impact on Grindrod’s Port and Terminals business.

Grindrod’s Container businesses, meanwhile, are assisting with the transport of essential cargoes.

Containers with non-essential cargo are evacuated to depots for later delivery.

Container berths across the South African ports have been significantly reduced and therefore the businesses are operating well below optimal levels.

The northern Mozambique business continues to provide essential logistics supplies to the Palma region.

The Carrier businesses have ceased operating with minimal requirement for fuel transportation.

The North-South Corridor is currently limited to essential crossborder traffic. The Rail business will consequently see a reduction in earnings.

Grindrod Bank, together with the banking industry, is providing relief measures in response to the increase in customer requests for loan restructures or temporary relief.

Grindrod is deploying its available cash on priorities during this time. Identified non-essential cost items, and projects are being deferred.

The impact of the South African lockdown on Grindrod’s liquidity outlook is assessed continuously. Offshore cash is being repatriated into South Africa and banks engaged to secure additional headroom in the event of a prolonged period of low revenue.

Grindrod Bank has sufficient headroom on its liquidity cover and capital adequacy ratios, and these metrics are being monitored closely.

The situation is fluid and Grindrod is organised in a manner to respond quickly to changes in

the circumstances, the company concluded.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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