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Transnet’s net profit increases by over 230%

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Transnet this week presented its interim results for the six months ending September 2017 which showed that the company’s net profit for the period increased by 3.4 billion which is more than 230% higher than the previous year.

Delivered on Monday in Johannesburg, the results were driven by improved operational performance and a slight rise in consumer demand and mineral production output in the country.

The state-owned freight and logistics company results showed that revenue was up 13.8% to R37.1 billion, underscored by a 7.9% increase in general freight volumes; a 6,5% increase in export coal railed volumes; and an 11.4% increase in railed automotive and container volumes.

Operating cost at the company were contained at R20.8 billion with a R2.2 billion in savings.

“Although the economic environment largely remains under pressure, Transnet’s strategy to move rail-friendly cargo from road to rail is starting to pay dividends with the company gaining market share in general freight cargo and coal volumes,” said the company.

The company’s key measure of profitability – earnings before interest, tax, depreciation and amortization (EBITDA) improved by 17.7% to R16.3 billion.

“An exceptional improvement was noted in profit from operations after depreciation and amortization which rose by 69.1% to R9.9 billion compared to R5.9 billion in the prior period,” said Transnet.

Transnet railed a record 37.8 million tons of export coal volumes compared to 35.5mt in the prior period, a 6.5% increase, despite various operational challenges, including equipment failures, unprecedented community unrest and security challenges.

However, poor volumes were experienced in sectors such as granite which registered a decline of 13%, as well as cement and lime recording an 8% decline in volumes due to an unavailability of mix product and plant breakdowns.

Meanwhile, export iron ore volumes were impacted by volatile market conditions, accompanied by lower demand from customers and a number of safety incidents reported during the six month period, resulting in a modest volume increase of 1.7%.

Freight Rail

The timely delivery of newly-built and refurbished rolling stock to freight rail, coupled with the delivery of locomotives for the 1 064 locomotive programme, and the delivery of coaches to the Passenger Rail Agency of South Africa by Transnet Engineering has led to an increase in revenue by 29.4% to R4.8 billion in this operating division.

Revenue increased by 16.1% to R6.5 billion at Transnet National Ports Authority, mainly as a result of increases in cargo dues revenue and the release of claw back provisions informed by Regulatory decisions.

The company also saw growth in container volumes due to local and international consumer demand. The demand resulted in a 6.1% increase in container volumes to 2.4 million TEUs (twenty-foot equivalent units).

However, performance was hampered in the pipeline operating division.

“A decline in market demand, for refined petroleum products, as well as production challenges at an inland refinery continue to hamper the performance in the pipeline operating division. Petroleum volumes transported decreased by 2.9% to 8.3 billion litres compared to 8.6 billion litres in the prior period.”

The company was also able to raise R9.9 billion without government guarantees. The funds were raised from development finance institutions (R1.5 billion; commercial paper and call loans R5.8 billion; export credit agencies R1.4 billion; and domestic bonds R1 billion).

Transnet further announced that it has invested R560 million in the New Multi-Product Pipeline during the reporting period.

“The coastal terminal in Durban (excluding tanks), the 24-inch main pipeline and 16-inch inland pipelines have been fully commissioned and are operational, with four different petroleum products now being transported from Durban to the Gauteng region.”- SAnews.gov.za

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.