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.