Logistics group Grindrod reported record tonnage at its ports and terminals in the financial year to end-December and will focus on building more compelling niches in its sprawling commodity handling portfolio.
At an investment presentation on Thursday, Grindrod CEO Xolani Mbambo stressed that commodity diversification in dry bulk handling remained an imperative.
The group’s present portfolio mostly involves magnetite, iron ore, chrome, ferrochrome and coal. It also handles smaller volumes in a slew of other commodities, including granite, fertiliser, fluorspar, grains, sugar, andalusite, oils, fuel, cement, steel, aluminium, petcoke and sulphur.
Grindrod will now focus on graphite, copper and lithium handling, which are all in higher demand as a result of growing ESG (environmental, social and governance) guidelines, Mbambo added.
It will also further expand its substantial manganese handling after the recent decision to spend R155m on a facility in the Eastern Cape, he said.
Grindrod disclosed record volumes of 9.8-million tonnes handled by the port of Maputo in 2022, up 29% from the previous year. Mbambo said the growth reflected the efficient use of rehabilitated berths — commissioned in May last year — and the implementation of 24-hour operations at the Lebombo/Ressano Garcia border in April.
Grindrod’s dry-bulk terminals handled a record 16-million tonnes in 2022 compared with 13-million tonnes in the previous financial year.
The Matola dry-bulk terminal in Maputo handled 8.1-million tonnes. Mbambo said this was a resilient performance despite the loss of 20 vessel-loading days due to the berth infrastructure incident in April as well as a train collision in November.
The Maputo terminal grew its export volumes to 3.2-million tonnes, a fivefold increase for the year.
On the logistics side, Grindrod said the coastal shipping and container depot businesses recovered exceptionally well after the floods in KwaZulu-Natal, with strong container handling performance and higher shipping rates on the subleasing of the chartered vessels.
Mbambo said the northern Mozambique graphite operations delivered solid results and delivered an alternative break-bulk solution out of the port of Pemba, handling 61,853 tonnes for the year. Grindrod also started its East Africa crude oil pipeline in the region.
Mbambo said Grindrod’s locomotive deployment and refurbishment programme was progressing well. “While the business has experienced success in short-term deployment, management continues to seek opportunities for long-term deployment.”
Brendon Hubbard, senior fund manager at ClucasGray, said IFRS (International Financial Reporting Standard) results obscured how well Grindrod had actually done. “If you look at the volumes, they have done very well ... and continue to be a beneficiary of Transnet’s slow demise.”
Grindrod’s investment presentation shows that the core business — ports, terminals and logistics — generated bottom-line earnings of nearly R1.1bn, or about 192c a share. Revenue was 58% higher at R7.4bn.
Cash generated from operations of R1.7bn was up 62%, with another roughly R1.6bn banked late last year from the sale of Grindrod Bank.
Grindrod’s marine fuels business — the biggest noncore operation with turnover of more than R16bn — saw earnings up 119% on healthy fuel margins in line with strong oil prices in 2022.
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