Transnet turns to profit
Jul 6, 2005
Transnet Ltd this week announced the 2004/05 financial yearend results, revealing a solid turnaround after a loss making previous year.
Attributable profits on a turnover of R46.2Bn increased to R6.8Bn – a 6% improvement on 2003/04. Profit from operations was R6Bn which reflected a 35% increase.
Main contributors to this improved situation were the core business divisions – National Ports Authority (NPA), SA Port Operations (SAPO), Spoornet (the rail company), Petronet (pipeline company) plus Transnet’s soon to be hived-off South African Airways (SAA).
In 2003/04 Spoornet and SAA dragged down Transnet’s results, with SAA recording a hedging loss that effectively took the entire group with it. The government has since announced that from March 2006 SAA would become a separate company outside Transnet.
Maris Ramos, Transnet chief executive said that while the results this year were pleasing, the road ahead remained challenging.
“The turnaround of Transnet can only be successful if we can improve on these results in a sustained way over the long term. We have to ensure that this performance is not another false start. What we have achieved is a platform on which to build the future of this company.”
She said the group was now better positioned to implement the R40Bn investment programme approved for the next five years. The investment will be financed from operations and borrowings as well as the sale of non-core operations and will address the backlog and upgrading of rail and port infrastructure aimed at building added capacity to meet customer demand.
Transnet’s main focus of spending during the five years is expected to be with Spoornet (R16Bn), where the Orex ore line to Saldanha and the coal line to Richards Bay are to receive major attention in addition to the Durban-Gauteng main line, and on the port side of things, the harbours at Durban and Ngqura (Coega).
Of the core companies making up Transnet the NPA reported an operating profit of R3.3Bn from a turnover of about R5Bn, SAPO had a profit of R1Bn (up from R348 million and on target with CEO Tau Morwe’s predictions) on a turnover of R3.4Bn and Petronet R600 million.
A fuller breakdown of individual company results will be released in August when Transnet’s annual report is published.
Minister of Public Enterprises Alec Erwin indicated that he was pleased with the progress of the new Transnet management team, which has been in office for less than 18 months.
“The team now has to ensure that the platform created by the results is solidified so that the R40.8Bn capital expenditure programme is implemented effectively and efficiently over the next five years.”
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