Grindrod upbeat about prospects

Shortage of vessels and spiking shipping costs bode well for group, says CEO Andrew Waller

Freight and financial services group Grindrod says it is looking to benefit from robust post-Covid commodity demand and rising shipping costs. A shortage of vessels and spiking shipping costs bode well for a group focused on supply chains and affordability.

Freight and financial services group Grindrod says that it is looking to benefit from robust post-Covid-19 commodity demand and rising shipping costs. The Durban-based group owns ports, terminals and tankers, as well as trucks that haul everything such as food, petrol and animal feed in Southern Africa, with a focus on growing its footprint, particularly in East Africa. A shortage of vessels and spiking shipping costs bodes well for a group focused on supply chains and affordability, CEO Andrew Waller told Business Day on Thursday. “People do not like to be told that half the cost of their product is getting it from one side of the world to the other. Our focus is to make that more affordable,” he said. Strong mineral volumes helped Grindrod’s business in the midst of Covid-19, which disrupted supply chains and economic activity in general. As big economies roll out stimulus measures to offset the effects of Covid-19, Grindrod expects strong commodity demand to continue to prove beneficial for 2021. Group revenue from its core business which includes ports, terminals, logistics and Grindrod Bank fell 1% to R4.75bn in its year to endDecember, with profit to shareholders from core operations rising 4% to R316m. Ports and Terminals just over a fifth of core revenue saw a volume reduction, but benefited from a weaker rand, while it had seen a strong recovery in the last quarter of 2020, and profit rose more than a quarter to R229m. The group’s logistics business over two thirds of core

DESPITE IMPROVED CORE-BUSINESSES PROFIT IT DELAYED THE REINSTATEMENT OF A DIVIDEND

revenue grew revenue slightly and profits by 2.5% to R137m. It also saw an improved performance towards the end of 2020, and benefited from increased shipping activities, a “buoyant citrus season” and strong mineral volumes. Profit from Grindrod Bank more than halved to R37.5m, which the group said was commendable in a tough trading environment. Loans were up 8% at R8bn, while core deposits saw a decrease of 8% to R8.5bn. Grindrod had spun off its now separately listed shipping business in 2018, and still has businesses it is looking to sell that do not fit with its African transport focus, and which continue to weigh on its results. Revenue from noncore operations fell 28% to R11.6bn. The group narrowed its loss attributable to ordinary shareholders by a third of R415m, but saw hefty write downs to its private and property equity portfolio of R329.9m in 2020. A sale of this portfolio had fallen through in late 2020, and the group is still looking to sell it though this is now unlikely to be to a single buyer. A sale of the group’s marine fuel business Crockett Marine also fell through in 2020, though there are still a number of interested parties, said Waller. “This remains a good business, is run well and has good margins,” he said. Grindrod said that despite improved profit from its core businesses, it had delayed the reinstatement of a dividend, as it deals with the debt from its noncore businesses. The group had net debt of R682.8m at the end of December, from R69m in 2019. In afternoon trade on Thursday Grindrod’s share price was down 0.2% to R4.97, having recovered 14.25% in the past 12 months, but having fallen 40% in the past two years.