Investing in Africa’s logistics capacity pays dividends
Grindrod announces results
SOUTH AFRICA: Investment in terminal equipment and upgrades as well as capital expenditure in infrastructure and the purchase of a landing craft vessel have proved beneficial for Grindrod Limited (Grindrod), who reported a 26 per cent growth in headline earnings for the first six months of 2023.
Grindrod reported core headline earnings of R563 million and doubled its dividend to 34.4 cents a share. This was supported by continued strong demand for Grindrod’s logistics solutions through its cargo terminals, infrastructure footprint, and complementary logistics service offerings.
Port and Terminals
Anticipating an increase in the demand for exports, Maputo port capacity was improved with the delivery and commissioning of two mobile harbour cranes at a cost of R392 million.
Maputo port reported an increase of 30 per cent on prior period volumes. Overall, Grindrod’s drybulk terminals in Mozambique performed well. Volumes were up 17 per cent on the prior period as the demand for the export terminal footprint persisted.
In addition, the first phase of the Matola drybulk export terminal upgrade is progressing well with debt raising to fund the project underway and a bankable feasibility study well advanced. Detailed design work on major plant components has also commenced.
Rail and logistics
According to Xolani Mbambo, CEO of Grindrod Limited, the company aims to provide cost-effective logistics on the continent.
“We have ambitious plans to promote trade in sub-Saharan Africa and are eager to strengthen our relationships and collaborate with key stakeholders to benefit the continent. Rail will play a pivotal role in achieving these plans,” he says.
Grindrod has invested R207 million into the Northern Mozambique and East Africa business and been rewarded with good results with headline earnings up 15 per cent on the prior period.
The construction of the Pemba port warehouse has been completed and will enable a new route-to-market for a graphite customer.
In addition, a landing craft vessel was purchased to facilitate a regular marine freight service between the various commercial ports on the East Africa seaboard and specifically aimed at servicing project cargo logistics. Project cargo handling equipment for the crude oil pipeline logistics solution in Uganda has also been deployed.
Capital expenditure in the container landside businesses amounted to R106 million. This includes handling equipment as well as further expansion at the container facility in Johannesburg to meet growing market demand and offer customers full suite of container handling services. According to a statement from the company, the integration of Grindrod’s and Maersk’s South African container businesses, following the merger transaction implemented at the start of the year, is progressing well.
Grindrod is collaborating with Transnet Freight Rail, Mozambique Port and Railways (CFM), Zambia Railways, eSwatini Rail and National Railway of Zimbabwe on the ongoing initiatives to improve rail efficiencies.
Their rail leasing business in Sierra Leone continues to deliver, having exceeded the 10 million tonne-mark since its inception in February 2021. This business unit was recently awarded a contract for operating a manganese rail siding in the Northern Cape.
Grindrod is focusing on systematic increase of its rolling stock capacity over the coming years in response to the anticipated demand increase and to reduce logistics costs for customers.
The eSwatini multimodal corridor operation, which provides customers in the Mpumalanga area with an alternative route to Maputo and Matola export terminals, performed well. Three hundred and fifty-seven trains moved through the corridor during the first half of the year, 90 per cent up from the prior period.
Grindrod’s ships agency and clearing and forwarding headline earnings were strong, up 149 per cent on the prior period due to new customer contracts and increased number of port calls.
Marine fuels impacted by softer oil prices.
Marine Fuels Marine Fuels achieved positive headline earnings albeit down 40 per cent from the prior period due to the softer oil prices. Grindrod continues to actively engage its co-shareholders in this business on the way forward.
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