Smiles all round at Grindrod annual results

Aug 17, 2005
Author: Grindrod Group

Grindrod, South Africa’s leading shipping and logistics company today announced an 80% increase in profit attributable to ordinary shareholders, 73% increase in headline earnings per share and 100% increase in interim dividend for the 6 months ending 30 June 2005. This is in line with the trading statement issued on 18 July 2005 which indicated earnings growth of between 65 - 75%.

Ivan Clark, Chief Executive Officer said that the combined effect of the earnings in favourable shipping markets, the high level of contracted income, the increased fleet size and low fleet cost all helped to contribute to the improved earnings.

The group’s shipping services division continued to perform strongly in the first half of 2005 with earnings growth of 81% over the prior year.

Island View Shipping (IVS), the group’s dry bulk owner and operator, has a substantial fleet of capesize, panamax and handysize bulk carriers purchased or chartered in at favourable rates. IVS continues to take delivery of ships contracted in the past at favourable rates. Four ships were delivered in the six months to June and a further eight are still to deliver. “IVS continued to perform well through the contracted earnings of its capesize and panamax vessels, good earnings from the handysize ships employed in the Lauritzen/IVS pool and the IVS parcel service” said Clark.

“The strong tanker markets and the weakening Rand against the Dollar since 31 December 2004 contributed to Unicorn Shipping’s excellent results from both contracted and spot earnings,” said Clark. Unicorn Shipping, the group’s product & chemical tanker, container ship owner and operator, further expanded the fleet during the period with the delivery of a container ship and ordered two 12 800 dwt product/chemical tankers. It also contracted the sale of a 50% interest in a product tanker for delivery in 2006 while the sale of another product tanker, contracted during the prior year, will be concluded in the second half of the year. It has seven newbuilding ships on order at favourable prices and four chartered ships at good rates, all of which will deliver over the next three years.

“The group’s strategy is to diversify risk through having a mix of ships with contracted income and ships employed in the spot market .We have about USm contracted profit for 2006 and we will continue to look for opportunities to lock in further earnings when the timing is right,” said Clark

Ivan Clark said that he was satisfied with the earnings growth of 65% over the prior year for the group’s freight and financial services division.

“We are working hard to significantly increase the contribution from our freight operations through the acquisition of new businesses and have made substantial progress in the first six months of the year. We do however, have some way to go to reach our target of one third of earnings from these operations, but we are confident that it will be achieved.”

The group plans to utilise cash generated from operations and the R500 million preference share capital raised from the recent issue for investment opportunities. Clark said, “Investing our cash well is key to the sustainability of the group’s profits.” He further added that the profits from new investments, which will include rail and terminals in public/private partnership; together with contracted shipping profits, the low fleet costs and profits from the new bulk product trading operations will ensure continued growth in spite of the cyclicality of the shipping markets.

The group’s strategy to increase the profit contribution from freight operations through the acquisition or development of complementary businesses has made significant progress. During the period, the following acquisitions have been made:

  • African Portland Industries – bulk terminal operator in Namibia and Mozambique

  • 50% share in Sheltam Rail – locomotive operator

  • Uniroute’s warehousing facilities

  • Sea Munye – bulk product warehousing operation in Richards Bay

  • The external grain and soya trading and logistics business from Seaboard Corporation through a new operation, Atlas Trading and Shipping

  • 50% of Cockett Marine Oil – international bunker fuel supplier

  • 50% of Oreport – trades in and provides logistical services for mining products

  • Increased share in Röhlig-Grindrod from 42,5% to 50%

  • The group has employed a number of senior managers to ensure that it has adequate skills to manage this expansion.

    Grindrod has positioned itself to provide the full range of logistical services for its significant customer base and will strive to continue to deliver exceptional service.



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