The insurgency in northern Mozambique coloured the interim results for freight and financial services company Grindrod, which grappled with this and other challenges in the first half of 2021.
In its results for the six months in June 2021, Grindrod said its core business — port and terminals, logistics and the Grindrod bank — had done well despite a complex trading environment in SA and other African jurisdictions in which it operates.
This included the continued effects of the pandemic where Covid-19 protocols hampered the movement of traffic up to the port of Maputo and ships with Covid-positive crew on board were unable to come into the harbours.
It was the violent insurgency in northern Mozambique that caused Total Energies to halt a $20bn natural gas project in the area in April and proved a blow to Grindrod, causing it to book a R53m loss in relation to this.
Big investments centre on big gas finds in Mozambique’s Rovuma Basin, and businesses establishing themselves around the activity have struggled to get product into the remote and undeveloped area — a need Grindrod helped cater to.
The group, however, had to book losses in relation to lease exposure to 13 small ships it chartered. “We also started building a site there. So we had a couple of million that we wrote off on that site because we didn’t want to carry that cost,” said Grindrod CEO Andrew Waller. “And we had a couple of debtors that we’ve done work for that are now saying they can’t pay us because they aren’t getting money from Total, so of course that is a legal process and we have put provision away for that as well.”
Waller, however, said he believed the gas resource is too big to go undeveloped and Grindrod remains agile to resume activities in Mozambique when required.
Despite the headwinds, the core businesses reported interim headline earnings of R345m and a trading profit of R779m, marking a rebound from the Covid-hit first half of 2020 and benefiting from robust demand for commodities and a strong agricultural season in the first half of 2021.
The Grindrod Bank, though it took a conservative approach to lending amid the continue economic impact of Covid-19, still reported increases in revenue and net profit.
The performance of the core businesses remains clouded by noncore land and marine fuels assets, which Grindrod is yet to dispose of.
“Essentially, what we try to do is ... to realise cash from all of them and to sell some of these businesses in the current market is near impossible,” said Waller, who noted that because Grindrod typically holds minority stakes in these noncore business it is unable to call the shots on the selling price.
He said shareholders remained invested in Grindrod for its core businesses.
The Grindrod share price ended 1.19% lower at R4.99 on Friday.
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