State-owned logistics company Transnet has recorded a R1.6bn loss for the six months to end-September citing lower port and rail volumes. The company recorded a profit of R159m during the same period in 2022.
Despite the stark reversal in performance the group said it is “positive about the various rail and port volume improvement initiatives it is implementing and expects ongoing improvements in its performance as its recovery plan gains momentum”.
The implementation of the wide-ranging recovery plan is one of the conditions set by the National Treasury after it agreed to a R47bn credit guarantee facility for Transnet, which is facing a R135bn debt pile.
The Treasury agreed to the support package to help ease the entity’s financial challenges after it breached debt covenants, meaning it is no longer able to borrow on the open market.
Transnet will be able to draw down an immediate R22.8bn from the facility to deal with present challenges, including the settlement of maturing debt.
In its interim results published on Friday the company said its rail division, which accounts for nearly half of revenue, was negatively affected by various operational challenges including collisions, community unrest on the coal line and equipment challenges on the ore line, derailments, cable theft and power outages affecting all lines.
Volume performance was lower than the prior period, reflecting a decrease of 7.2% to 75.6-million tonnes (Mt) compared to 81.5Mt railed in 2022.
“Freight Rail was negatively impacted by continued challenges relating to security-related incidents, rolling stock unavailability and safety incidents. This resulted in a slower-than-expected recovery from the constrained volume base of the prior financial period,” Transnet said.
Container volumes for the period were down 1.8%. Transnet’s interim revenue increased 8.6% to R39.2bn due to average increases in tariffs for its rail, port and pipeline businesses. However, this was offset by the lower volumes it handled.
The entity’s expenses increased 9.5% to R25.3bn due mainly to higher personnel, electricity, security and material costs.
According to Transnet its recovery plan has clear targets for volume growth and the improvement of capacity over the next six, 12 and 18 months, “aimed at improving operational and financial performance and curbing expenses”.
“These interventions include securing crucial cargo handling equipment for the ports, awarding of the spares and maintenance service contracts for existing equipment, and resolving the locomotive challenges in Transnet Freight Rail,” the company said.
With TimesLIVE
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