IN­VEST­ING STRATE­GI­CALLY

Finweek English Edition - - Companies & Markets -

SHIP­PING RE­MAINS Grindrod’s ma­jor profit con­trib­u­tor, com­pris­ing 90% of to­tal earn­ings in the six months to June 2008. First-half earn­ings al­most dou­bled to R1,104m com­pared to R570m in 2007, with head­line earn­ings per share in­creas­ing 95% to 242c/share (2007: 124,6c/share). The se­vere fall in com­mod­ity prices and weaker de­mand for iron ore and coal in sec­ond half 2008 ad­versely af­fected the group’s dry-bulk cargo busi­ness.

Al­though Grindrod has po­si­tioned a por­tion of its fleet to take ad­van­tage of high spot prices in the mar­ket, many of its ships have been con­tracted, re­sult­ing in a good por­tion of Grindrod’s in­come be­ing locked in. That pro­vides pro­tec­tion for the group against fluc­tu­a­tions in spot prices, which are highly sen­si­tive to pre­vail­ing com­mod­ity prices. As at June 2008, 64% of Grindrod’s owned and char­tered fleet was con­tracted for the re­main­der of 2008, 51% for 2009 and 35% for 2010.

The group has a strong bal­ance sheet, con­ser­va­tive gear­ing and a high cash gen­er­at­ing ca­pa­bil­ity, al­low­ing it to fund strate­gic in­vest­ment op­por­tu­ni­ties. Sound port in­fra­struc­ture is key to the suc­cess of the group’s pri­mary ship­ping ac­tiv­i­ties, with the com­pany in­vest­ing in all SA’s har­bours, as well as those in Namibia and Ma­puto (Mozam­bique).

In 2008, Grindrod and Dubai Port World ac­quired a con­trol­ling stake in the Ma­puto Port De­vel­op­ment Com­pany in Mozam­bique. That’s of strate­gic im­por­tance to the group, which re­quires a pres­ence along the East African corridor.

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