Durban, 27 August 2020: Grindrod Limited (Grindrod) released its interim financial results for the six months ended 30 June 2020. Trading profit was up 10% compared to the first half of last year, revenue was down by 5%, and cash generated from operations is R507.4 million, a 40% increase on the prior year. Additional banking facilities advanced of R450.0 million remain available. The balance sheet continues to be strong, with net debt to equity of 5%.
Port and Terminals reported good volumes through the Maputo Port and Matola Terminal. Matola Terminal volumes increased by 13% on June 2019. Infrastructure development (berth and slab rehabilitation) in Maputo Port was delayed by the pandemic but is expected to be completed in the second half of the year.
Grindrod’s terminal facilities in Richards Bay continued cargo flows during the lockdown period and commenced sulphur rail shipments to Zambia. The rail bodes well for the strategic unlocking of the North/South corridor into and out of Richards Bay, which will attract additional cargo flows to the Port of Richards Bay. Investment in the Richards Bay facilities during 2019 and 2020, was strategic for unlocking the bi-directional traffic flow of sulphur, copper concentrate, and fertiliser as primary commodities.
The Seafreight business and its landside container operation achieved earnings growth of 30% compared to the same period in 2019. Container volumes delivered peak performance during the first quarter with essential cargo shipments continuing during lockdown. The container business has acquired additional space in Port Elizabeth and a long-term tenure at its Maydon Wharf facilities. Grindrod will continue to expand their footprint on the back of customer commitments.
To provide services to what is expected to become the world’s biggest LNG region, Grindrod has increased its presence in Northern Mozambique. Despite many obstacles such as insurgency attacks, poor road infrastructure, and COVID-19 lockdowns, Grindrod has established a dedicated delivery seafreight service to Cabo Afungi ex the main hub ports of Mocimboa da Praia, Pemba, and Nacala. To support the logistics involved, Grindrod established operations in Pemba and Cabo Afungi, where trucks and the four-chartered vessels are loaded and off-loaded for deliveries to and from the Cabo Delgado Province. Further to this, Grindrod acquired the rights to a strategically located plot of land near Palma and will develop a facility to support containerised and break-bulk cargo transportation.
Rail logistics improved its performance in the first half of the year and volumes post the South African lockdown period showed an improvement as rail operators strived to reignite traffic on the North/South corridor. Locomotives and wagons have now been deployed on the Dar es Salaam corridor.
The road transportation businesses were negatively impacted by reduced economic growth in South Africa, but improved market conditions are expected.
Grindrod Bank continues to operate cautiously during this time, ensuring that its liquidity cover and capital adequacy ratios remain above minimum regulatory requirements. Core deposits remained relatively stable, recording a marginal decrease of 5% on December 2019. Of significance was the increase of core deposits during the second quarter while under the COVID-19 pandemic.
Andrew Waller, CEO Grindrod Limited, said: “During the second half of 2020, Grindrod will continue precautionary measures across all businesses in response to COVID-19, ramp up the development of assets, focus on efficiencies across supply chains, and diversify across commodities. Our strategic focus remains on unlocking key corridors by investing in infrastructure and working with customers to find the most efficient and cost-effective logistic solutions.”
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