Transnet, the state-owned logistics company, has once again not paid bonuses to its executives and senior managers despite bouncing back to profitability on the adjusted value of its property portfolio.
The group reduced its permanent employee headcount to 46,086 from 49,602, with some taking voluntary severance packages and others retiring or leaving. This pushed personnel costs to 58% in 2022 from 51% in 2021.
Group CEO Portia Derby was paid R8.5m, while Siza Mzimela, CEO of Transnet Freight Rail (TFR), got a R6.1m package. Pepi Silinga, CEO of the National Ports Authority, took home R5.9m, group CFO Nonkululeko Dlamini was paid R5.8m and chief legal officer Sandra Coetzee received R5.4m.
The group designed a short-term scheme, the Transnet turnaround incentive scheme for management employees, to reward them for turning it from a loss-making into a profit-making entity. But eligible employees were unable to benefit because technically Transnet is still running at a loss.
“In terms of the 2021/2022 financial period, management employees did not receive any short-term incentive payments as the requirements of the scheme were not met.”
Transnet said bargaining unit employees received a 5% salary increase effective April 1 2021, while increases for employees in the management category ranged between 0% and 5%.
Until we break the back of cable theft we are really in trouble
— Portia Derby
Meanwhile, cable theft remains a major headache, with the group reporting that more than 1,500km of cable were stolen on its railway network in the period ended March 2022. Alongside vandalism, cable theft continued to be a major risk to security, resulting in derailments and hurting performance.
Transnet said in its 2022 integrated annual report released this week that it had spent more than R1.6bn on security and R400m on replacing stolen cables. It estimated that due to operational disruptions caused by cable theft, TFR had lost R1.9bn in revenue in the year.
“The one thing about cables that get stolen is that we pay for it and we do not charge customers. Whenever they steal it does not matter whether they steal 30m or 100m, whatever it is, it has the same disastrous impact on the supply chain performance,” Derby said at the results presentation on Wednesday.
“We often have people say we should improve our operational performance, but we’re doing everything we can. Let us be honest, until we break the back of cable theft we are really in trouble.”
Transnet swung to a R5.04bn net profit during the year ended March 2022, from an R8.7bn loss in the prior year. An accounting readjustment of its massive property portfolio added R10.2bn to its balance sheet.
Transnet generated R68.5bn in revenue, up 1.8% from a year ago. However, TFR reported that revenue had declined by 4.1% from R39.4bn to R37.8bn, affected mainly by challenges on the coal line. Freight rail accounts for 33.7% of Transnet’s volumes. The Minerals Council SA has complained that limited rail capacity cost bulk commodity exporters R35bn in lost revenue.
The company and the Special Investigating Unit have launched an application in the high court to review and set aside a R61bn locomotive supply tender with China South Rail, China North Rail, Bombardier Transport and General Electric. Numerous investigative reports, including the commission on state capture, found that Transnet had overpaid on the contract by billions. The impasse has meant that half of the 1,064 locomotives ordered have not been delivered, seriously hampering the performance of its rail division.
Dlamini said the unqualified audit received was important because it had been difficult to be active in the bond market. “It becomes very difficult when you are having qualified audits to be active in the market. It has impacted us. It is a milestone for us to be getting an unqualified audit.”
The group is emerging from the ravages of Covid and has grappled with operational challenges exacerbated by civil unrest, a cyberattack and floods that derailed business at its container terminal in the Durban port.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.