Grindrod Group has impressive half year

Jul 27, 2004
Author: P&S


Shrugging off any effect a stronger rand might have had, the Grindrod Group yesterday announced a 155 percent increase in headline earnings and a 149 percent increase in cash generated from operations for the half-year ended on June 30.

“The group is continuing to benefit from the charters it entered into during market lows and the strong shipping markets in the current period, says managing director Ivan Clark.

He says he is confident the Grindrod success story will continue and anticipates achieving similar earning levels in the second half of the year.

“This can be done through the high level of contracted revenue from fixed charters, growth in exiting business and expected continued strength in world shipping markets.”

Star performer for the period was Island View Shipping (IVS) which Clark described as a major player in world dry bulk markets and which was continuing to achieve high growth due to the strong bulk shipping markets and IVS’ favourable fleet charter base. IVS is adding further to its fleet with the delivery of additional bulk vessels contracted for charter some time ago.

On the back of firm product and chemical tanker markets Unicorn Shipping achieved solid results despite the strong rand having a significant negative impact on performance. Grindrod expects these markets to remain strong for the foreseeable future and the business will be increasing its fleet substantially through newbuildings and long term charters.

He said Grindrod would continue with its strategy of diversifying risk through having a mix of ships on long-term charter and in spot markets. 40 percent of the fleet is employed through fixed charters of one to three years, which will ensure the effect on earnings will be minimised should the markets decline in the future.

During the period Unicorn Tankers took delivery of two 37,000-dwt products tankers with a further five remaining to be delivered. Of the two ships taken into service during the half-year, Southern Unity is on charter to oil majors in South Africa through the BEE company Southern Tankers, and Nyathi has been chartered by a European oil major.

Clark said that future capital commitments will be funded from the strong cash flows generated by operations and ship financing facilities.

Landside

Grindrod’s landfreight operations moved into fast moving consumer goods logistics and distribution through an acquisition during the period under review and Clark has indicated the group will be looking to further expand these businesses.

“We’ll do this through greenfield opportunities, increased market share, the acquisition of complementary transport and logistics operations as well as the development of warehousing and terminal facilities in Southern African ports,” he said.

Stronger contributions also came from Grindrod’s ship agencies and from Ocean African Container Lines, the joint venture with Safmarine.

Grindrod declared an interim dividend of 50c per share (compared with 18c per share for the period in 2003).


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