Grindrod’s strategic advantage of operating the Mozambican Port and Terminals continues to add value and mitigates the impact of under-performance in the logistics and trade corridor services group’s South African operations, says its chief executive Xolani Mbambo.
Grindrod traded robustly in its 2023 financial year in spite of a softening in the post-Covid commodity up-cycle and the impact of northern hemisphere conflicts on the global economy. Headline earnings growth in core operations was up 29% after revenue increased 3% to R23.5 billion.
In the company’s annual report, released Friday, Mbambo said that in their Port and Terminals division, the dry bulk terminal operated by Maputo Port Development Company (MPDC) reached record volumes of 12.6 million tons, representing growth of 28% on the prior year.
The 2023 performance was underpinned by strong chrome/ferrochrome volume and an eight percent rail improvement. The concession to operate the port by MPDC, in which Grindrod holds a 24.7% share, was extended in February this year by 25 years to 2058.
“This extension creates sustainability of our presence in Maputo for the foreseeable future. Grindrod’s Maputo and Matola dry bulk terminals grew their combined export volumes by 14% compared to 2022 and handled 12.9 million tons in 2023,” he said.
The first phase of the Matola dry bulk export terminal upgrade was progressing well at a combined investment of $30 million (R562m). Financing of the balance of the project at $100m was well advanced.
In line with the main concession extension for MPDC, discussions on the extension of the sub-concessions held by Grindrod were ongoing. The reconstruction of the conveyor belt linking Grindrod’s Navitrade and Richards Bay port had been completed.
In Grindrod’s logistics segment, the Eswatini multimodal corridor solution, in collaboration with Eswatini Rail and CFM, contributed positively with volume growth of 40% through this route compared to the prior period.
Grindrod’s locomotive deployment at year-end remained resilient, closing strongly at 70% and with railed volumes at 9.2 million tons in 2023. Progress to drive a sustainable rail offering via Grindrod’s integrated pit-to-port solution was advancing.
Access to the Société Nationale de Chemin de Fer du Congo (SNCC) rail network had been secured and commissioning would begin during the first half of 2024.
Following full impairment of the carrying value of R241m in the taxi finance business in the past year, the only material investment in the private equity portfolio was fully impaired leaving the group with no material exposure on the private equity portfolio going forward. Work continues to monetise the KwaZulu- Natal property-backed loans and advances exposure of R1bn had not yielded a tangible outcome.
The marine fuel trading business, a 50/50 joint venture with Vitol, remained profitable, but its lower margins in 2023 were due to subdued crude oil prices. Discussions with the co shareholders on the way forward on this investment were ongoing.
In terms of trading profit, the private equity and property had reported a R365m trading loss in 2023, versus a R48m profit from marine fuels, a R3m profit from group, a R1.34bn profit from ports and terminals and R1.17bn trading profit from the logistics segment.
Ports and terminals focus areas in 2024 were on operational efficiencies in Richards Bay, delivering integrated solutions, TCM replacement capital expenditure project, diversification in value-added services volumes, implementation and progression of the MPDC Port Master Plan and exploration of off-grid power solution opportunities for ports and terminals.
Capacity and capability expansion through infrastructure and asset purchase projects and commodity and regional diversification would continue.
In the logistics segment, the development and expansion of the container business would continue, locomotive availability and deployment would be improved, as would stakeholder engagement with rail operators and extension of railway concessions.
Development of new rail corridors would continue. The Pemba warehouse facilities would be developed and a focus was on establishing an integrated freight solution in East Africa to complement land-based activities.
Expansion of the Eswatini corridor woud also be a focus, while appropriate investment would be made in logistics infrastructure in the Port of Pemba and Uganda.
BUSINESS REPORT