GRINDROD sailed smoother waters in the six months to June, despite competition in choppy shipping markets, with group net profit soaring 119%, and headline earnings per share rising 25%.
The group says it executed a number of transactions and made good progress on projects aimed at making it an integrated freight and logistics service provider, while keeping afloat in shipping.
Notably, by introducing Vitol as a partner in its coal, oil and tanker businesses, it says progress has been made towards completing a feasibility study to expand the Maputo coal terminal to 20-million tons a year.
Vitol is one of the world’s largest charterers of oil tankers, and is also one of the largest independent energy traders.
"Maputo is a very important part of our strategy (including) in freight and services," Grindrod CEO Alan Olivier said yesterday.
Grindrod sold Vitol a 35% share earlier this year in the company that owns the Maputo coal terminal concession.
The two groups have also announced their intention to combine their sub-Saharan coal trading businesses.
Grindrod said its working capital position reflected a net inflow for the period of R439m, mainly from the further disposal to Vitol of a 50% interest in Cockett Marine Oil, a reseller and marine fuel supplier.
It also said the proceeds from the sale of the 35% interest in the Maputo coal terminal offset capital expenditure on ships, locomotives and terminals. The deals resulted in a reduction of group debt to R499m at the end of June.
While Grindrod said its terminal and marine fuel volumes were strong during the period, shipping rates continued to fall on oversupply in the market.
Grindrod said nontrading items included profit on the sale of the share in the Maputo terminal to Vitol, and the impairment of ship values.
"They’ve gone through a torrid time," Rob Forsyth, sector head of industrial stocks at Investec Asset management, said yesterday.
Shipping markets had been in the doldrums, he said, but along with a R2bn rights issue taken up by Remgro, Grindrod had taken large cash flows from shipping in 2006 and 2007, and had invested in other parts of its business.
"That brought in enough capital to tide them over for the next few years," Mr Forsyth said.
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