Grindrod Limited  announced its results for the year ended 31 December 2021.

The Group’s core operations comprising Port and Terminals, Logistics and Bank, delivered commendable results. Core Headline earnings increased by 166% to R886 million compared to R333 million in 2020.

Core operations inclusive of joint ventures
Revenue: R5.2 billion
Trading profit: R1.8 billion

Total Group on Legal basis
Cash from operations: R1.0 billion
NAV: R8.6 billion
Net debt to equity ratio, excluding Grindrod Bank: 26%
Dividend per share: 20.1 cents

Global economic recovery, and global demand for commodities, contributed to Grindrod’s strong results. The Port and Terminals operations handled record mineral volumes and the coastal shipping and container depot business delivered consistent and robust performance. Grindrod Bank performed well and continued its focus on quality lending and maintaining healthy capital and liquidity ratios.

Core

Port and Terminals

An efficient and cost-effective customer solution focus, the operational excellence drive and rail allocation improvement into Matola drybulk terminal yielded positive results in the second half of the period. Overall, Port and Terminals reported robust earnings growth of 70% on 2020, comfortably surpassing its pre-Covid-19 performance level.

Volumes handled at the Port of Maputo grew by 21% to a record 22.3 million tonnes, compared to the year ended 31 December 2020 (“prior period”). The berth rehabilitation and dedicated rail siding capital projects are now complete, with the dredge of the quayside having commenced.

The Matola drybulk terminal handled a record 8.3 million tonnes, up 50% on the prior period, and reported a monthly record volume of one million tonnes in September 2021.

The focus for Port and Terminals in 2022 is to grow volumes handled by securing additional rail, continuing berth optimisation, further unlocking Mozambique bottlenecks, ramping up the manganese solution, and taking advantage of inland terminals as part of the supply chain. Our terminal operations are ideally positioned to benefit from PSP opportunities. The fire in the Richards Bay port precinct late last year impacted the ability to meet increased customer demand. Still, a contingency operation was implemented through collaboration with Transnet and other port users, and full recovery of the operation is expected. Expansion plans for the drybulk terminals in Maputo are approved and further studies on infrastructure and equipment upgrades will commence.

We continuously strive to deliver efficient and cost-effective customer solutions by regularly seeking alternative and additional logistics routes to market for the customer’s cargo. This is in addition to continually harnessing our existing routes via Matola, Maputo, Richards Bay, Durban and Walvis Bay and relentlessly engaging our key stakeholders to ensure sustained relevance.

Logistics

The coastal shipping and container depot business achieved earnings growth of 33%, with the remaining businesses delivering consistent performance for the period. The coastal shipping and container depot business offered shipping lines alternative solutions for creating efficiencies in delivering cargo. The operation also increased its reefer capacity to meet the demand for increased fresh produce exports.

In November 2021, Grindrod announced a joint venture with Maersk, wherein the logistics activities of Grindrod’s Intermodal business will complement the current Maersk operations, the execution of which is subject to various conditions.

The clearing and forwarding business delivered solid results and secured the extension of key customer contracts during the year.

In 2021, Grindrod’s activities relating to the liquified natural gas project in Northern Mozambique ceased, due to the insurgency in the Cabo Delgado province, which necessitated impairments and provisioning of R78.2 million. We will continue to monitor the region to ensure readiness should operations resume. The impact of the indefinite stoppage was mitigated by the resumption of the graphite logistics business in Nacala.

The Rail business redeployed eight of its ten locomotives at Sierra Leone’s Tonkolili iron ore mine following its reopening and successfully completed the disposal of four locomotives for US$11.3 million (Grindrod’s share is US$4.8 million) to Uganda Rail. Further value may be extracted through the disposal and or the deployment of locomotives.

Bank

Grindrod Bank’s earnings improved by 157% from the prior year despite remaining cautious in its lending activities and retaining surplus liquidity in excess of R5 billion as at 31 December 2021. Current period earnings more than doubled in comparison to the prior period. The Bank’s lending and core deposit books increased by 5% and 20% to R8.3 billion and R10.3 billion, respectively, from December 2020.

During the period, Grindrod Bank concluded an agreement with Shoprite Checkers as a key new platform partner.

Grindrod Bank recommenced the project to raise additional capital to enable growth and enhance returns.

Car and Fuel carriers

The disposal of the car carrier business is complete, and the disposal of the fuel carrier businesses has progressed. This process necessitated the impairment of goodwill and assets of R266.6 million in the current period.

Grindrod Shipping shares

Grindrod successfully sold its Grindrod Shipping shares, generating proceeds of R338.1 million. A fair value gain of R238.2 million has been recorded in the current period.

Non-core

Marine Fuels

Management continues to work with the Marine Fuels management and co-shareholder to exit this investment.

Private Equity portfolio

The Private Equity portfolio now consists of only two significant investments. The disposal of the offshore real estate investment was concluded during November 2021 for £17.4 million in addition to several smaller investments. The strategy is to exit the remaining two investments at the right valuations.

KwaZulu Natal north coast property loans

Progress has been made by the various owners of the KwaZulu Natal north coast properties. Management continues to work with the principals to manage this exposure and settle the loans.

Conclusion

Grindrod delivers efficient and cost-effective solutions for its customers’ cargo flows, living its purpose to enable Africa’s trade with the world and touching the lives of the communities in which it operates. Grindrod Bank remains focused on its core strengths, expanding its SME offering and providing a compelling platform banking solution.