The share price of maritime transportation services group Grindrod Shipping (Grinship) fell to its lowest level in more than a year on Thursday after it flagged narrowing growth during the fourth quarter that reflected a progressive weakening of the dry bulk markets.
The group reported a loss of $4.58m for the three months to December — a far cry from the $52.8m profit in the same period in 2021.
As a result of the weaker markets and the special dividend already paid in the fourth quarter, the board of the company declared a base quarterly dividend of $0.03 per share for the fourth quarter, bringing the total dividend for the whole of 2022 to $6.34.
The loss reported by the Singapore-based company came as dry bulk markets — unpackaged commodities such as coal, iron ore and grain, that are shipped in large parcels by sea and destined for manufacturers and producers — weakened in the fourth quarter.
Grinship’s shares fell 11.99% to R246.31 — levels last seen in late December 2021 after the release of the three-months results.
Interim CEO and CFO, Stephen Griffiths, said the company will be prioritising net debt reduction and liquidity flexibility.
“As we look forward, the company will be prioritising net debt reduction and liquidity flexibility, particularly as the seasonally weaker first quarter has not rebounded materially after the conclusion of the lunar new year holidays in Asia,” Griffiths said.
“We have committed to reduce our leverage, which may include further ship sales. We are also keenly evaluating ways to create better economies of scale and operating margins for the benefit of all shareholders by optimising the integration of our businesses and operations.”
The company agreed in December to sell IVS Hirono, a 2015-built ultramax bulk carrier, for $23.75m.
With a primary listing on the Nasdaq Global Select Market and a secondary listing on the JSE, the mariner owns and operates a diversified fleet of long-term and short-term chartered-in dry-bulk vessels and generates its revenue from the vessels, which comprise charter hire of ships and freight revenue.
Its dry-bulk business, which operates under the brand Island View Shipping, includes a core fleet of 32 vessels consisting of 15 handy-sized dry-bulk carriers and 17 supramax/ultramax dry-bulk carriers.
In December Taylor Maritime raised its interest in Grinship to 83% and said the Grindrod delisting from the Nasdaq in New York and the JSE was likely.
For the three months to December 31, Taylor Maritime’s revolving credit facility and acquisition facility, linked to the Grinship deal, were $140m and $119m drawn, respectively.
After the transaction Taylor Maritime dictated that the board of Grinship be reconstituted, resulting in six new members to its now enlarged board, which consists of 10 members, including seven independent directors.
Griffiths said the company will be keeping a close eye on the strength of world economies, in particular China and the rest of the Asia-Pacific region, the effects of the Covid-19 pandemic on operations and the demand and trading patterns in the dry-bulk market, which is also cyclical in nature, as these are among the factors that could materially change the trading environment at any given point.
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