Logistics giant Grindrod saw its JSE-listed stock slip on geopolitical concerns on Friday even as the group reported a jump in core headline earnings for the year to end-December.
The firm has seen its share price slump more than 8% since the US and Israel struck Iran, threatening to engulf much of the Middle East in war as Iran retaliated with its own strikes on several Gulf countries.
On one hand, the group is directly exposed to operational risk through its wholly owned Sturrock Grindrod Maritime subsidiary, which has offices across the United Arab Emirates, which has already been involved in Iran’s “vertical escalation” of the war.
On the other hand, diversions away from the Strait of Hormuz, which has been largely blocked by Iranian strikes recently, are offering to substantially boost traffic to Southern African ports, such as the Port of Maputo and the Matola Terminal in Mozambique, in which Grindrod holds a significant stake.
Business Day reported earlier this week that while global carriers are reassessing routes after the weekend’s escalation involving the US, Israel and Iran, there has been no notable spike in additional berthing requests at local ports, including Cape Town, according to Transnet National Ports Authority.
The market headwinds come after Grindrod’s share price climbed to an 11-year high last month on reports that its Maputo port delivered record volumes of 32-million tonnes per annum (mtpa) last year.
Optimism has been building in the group since it was awarded third-party access to Transnet’s railways as part of the country’s open access rail reform agenda.
“Logistics, which includes rail, remain central to Grindrod’s value proposition, underpinning terminal throughput and enabling the provision of integrated logistics solutions for our customers,” said Grindrod in its latest annual results.
“We are progressing contract consultation on open access rail opportunities, and the logistics segment’s performance was affected by reduced deployment as a result of the rail refurbishment programme.”
The group reported a 17% rise in core headline earnings to R1.2bn as efforts to optimise its portfolio, together with a stronger logistics performance, began to bear fruit.
Port volumes were up 6% at 15.2-million tonnes, with the Matola terminal climbing 22% to 9.9-million.
The cash it generated from operations was more than double that of 2024 at R2bn, while core earnings before interest, tax, depreciation and amortisation (ebitda) rose 13% to R2.3bn.
Business Day
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