Grindrod progresses with logistics ambitions

The group says it executed a number of transactions and made good progress on projects aimed at making it an integrated freight and logistics service provider‚ while keeping afloat in shipping.

Notably‚ by introducing Vitol as a partner in its coal‚ oil and tanker businesses‚ it says progress has been made towards completing a feasibility study to expand the Maputo coal terminal to 20-million tons a year.

Vitol is one of the world's largest charterers of crude oil and oil product tankers‚ and is also one of the largest independent energy traders.

"Maputo is a very important part of our strategy (including) in freight and services‚" CEO Alan Olivier said on Wednesday.

Grindrod earlier this year sold Vitol a 35% share in the company that owns the Maputo coal terminal concession. The two groups have also announced their intention to combine their respective sub-Saharan coal trading businesses.

Grindrod said its working capital position reflected a net inflow for the period of R439m‚ mainly from the further disposal to Vitol of a 50% interest in Cockett Marine Oil‚ a value-added reseller and physical marine fuel supplier across Europe‚ the Americas and the Far East.

It also said the proceeds from the sale of the 35% interest in the Maputo coal terminal offset capital expenditure on ships‚ locomotives and terminals.

These transactions resulted in the group net debt position being reduced to R499m as at the end of June.

While Grindrod said its terminal and marine fuel volumes were strong during the period‚ shipping rates continued to fall on the back of oversupply in the market.

Grindrod said non-trading items included the profit on the sale of the Maputo coal terminal share to Vitol‚ and the impairment of ship values.

"They've gone through a torrid time‚" Rob Forsyth‚ sector head of industrial stocks at Investec Asset management‚ said on Wednesday.

He said shipping markets had been in the doldrums‚ but that along with a R2bn rights issue taken up by investment firm Remgro‚ Grindrod had taken large cash flows from shipping in 2006 and 2007‚ and had invested this in other parts of its business.

"That brought in enough capital to tide them over for the next few years‚" Mr Forsyth said.

The group said future capital was committed to the expansion of terminals‚ rail infrastructure‚ locomotives and ships.

However‚ this excluded any planned expansions of capacity in Maputo‚ Richards Bay and the development of a bulk liquid storage facility at Coega‚ each subject to final board consideration.

The group said its balance sheet remained sound‚ with total assets of R20bn. It said the net debt to equity ratio had been reduced to 5% at the end of June‚ on the back of cash on hand at the commencement of the year and cash generated during the period.

Capital expenditure in the period was R787m‚ of which 70% was for expansionary purposes‚ and the balance for maintenance or replacement capital expenditure.

The expenditure comprised payments on two dry-bulk ships‚ two tankers‚ another phase of the Maputo coal terminal expansion‚ locomotives and coal marketing contracts.