Ports & Ships Maritime News

Jun 29, 2009
Author: Terry Hutson











 


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TODAY’S BULLETIN OF MARITIME NEWS

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  • First View – JOHANNA RUSS

  • Transnet increases profits despite downturn

  • NSRI launches new rescue boat

  • Navigational warning as containers washed off Safmarine ship

  • News from the shipping lines

  • Piracy news – Seacom cable delay blamed on Somali pirates

  • Trade news – Invicta acquires Criterion Equipment

  • Pic of the day – FJELL




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    First View – JOHANNA RUSS



    The container ship JOHANN RUSS (9,956-gt, built 2006) which operates between Djibouti in the Red Sea to South Africa via East African and Mozambique ports, was in Cape Town recently. Picture by Ian Shiffman



    Transnet increases profits despite downturn

    Transnet Ltd’s annual results, published last week for the year ended 31 March 2009, revealed that the parastatal had increased profits by 3,0% to R13,2 billion compared to the previous year. This was on the back of an 11,6% increase in revenue to R33,6 billion despite tough trading conditions in the second half of the financial year.

    Earnings before interest, taxation, depreciation and amortisation (EBITDA), rose 3,0% to R13,2 billion, resulting in an EBITDA margin of 39,3% (2008: 42,6%).

    Mr Chris Wells, the Acting Group Chief Executive at Transnet, attributed the performance to a combination of factors mainly – the negative impact on volumes caused by the global downturn which was offset by productivity improvements and cost containment. “The financial year was a tale of two halves: a strong first half that positioned the Company for the sharp decline in volumes experienced in the second half. The impact of this slowdown was particularly more pronounced in general freight business (GFB) and containers where volumes decreased by 19% and 12% when compared to the first half of the year.

    “However, our rapid and proactive response in the form of cost savings, productivity improvements, the impact of a new export coal tariff and revenue opportunities mitigated the impact of the decline in volumes caused by the downturn, resulting in the credible performance we see in these results,” he said.

    Wells reiterated that the Company will proceed, as planned, with its infrastructure investment programme of R80,5 billion over the next five years despite the current recessionary conditions and the uncertainty regarding the period of recovery.

    Operating expenses increased by 18,0% to R20,4 billion on previous year’s levels due to the higher costs of fuel, electricity price increases and higher steel prices which made the cost of maintenance materials more expensive. This resulted in a marginal decrease in the EBITDA margin.

    Cash generated from operations, before changes in working capital, rose 2,6%, to R13,5 billion, reflecting Transnet’s ability to generate strong cash flows. The Company’s working capital was negatively impacted primarily by the increase in maintenance inventory, and an increase in receivables; due to an accrual of the coal export tariff and an amount owing from the Passenger Rail Agency of South Africa (PRASA) on the sale of Shosholoza Meyl (the passenger train service).

    As expected, gearing during the period increased from 30% to 36%, but it is still well below the 50% limit that Transnet has set to maintain a prudent financial position. “We are pleased with this level which shows the significant capacity we still have to tap the debt capital markets to fund our R80.5 billion infrastructure investment programme. Based on our plans and continuous focus on the critical financial ratios, we believe that in the medium term gearing will not exceed 47% even as we ramp up our capital investment programme.”

    Transnet has invested a record amount of R19,4 billion in the year as it rolled out its five-year capital investment programme. This represents a 22,8% increase on the amount invested in expanding and maintaining infrastructure and assets. The bulk of the R19,4 billion investment - some R10,9 billion or 56% - was spent on expanding operations by providing additional capacity while the balance – about R8,5 billion or 44% - was on maintaining current operations and improving efficiency.

    “This brings the total invested in the last five years to nearly R58 billion and is more than the cumulative expenditure in the previous 15 years. This significant investment represents a major step forward for the South African logistics backbone and will be a key enabler of future economic business,” said Wells.

    Transnet increased its shareholder’s wealth by 14,5% to R58,3 billion, demonstrating the improving financial strength of the business. The Company now owns assets worth R118,5 billion, reflecting an increase of 20,1%.

    “We have a very strong balance sheet and are approaching the debt capital markets with confidence. Our projects are value creating and bankable; and Transnet remains a good investment story: our cash generating ability is robust enough,” said Wells.

    During the year Transnet managed to raise the debt capital it required to fund its programmes. The Company raised a net R11,6 billion mainly through issuing domestic bonds; concluded certain bilateral loans with local and international financial institutions; signed an agreement for 35 billion ¥en in untied funding from the Japan Bank for International Cooperation; and concluded a R915 million transaction with Finnvera, the Finnish export credit agency (ECA).

    Wells said that even before the end of the first quarter of the new financial year, Transnet had already raised more than 50% of funding for this year.

    All the Company’s five operating divisions increased external revenues during the reporting period, whilst most improved their profitability. The exception was Port Terminals, which was worst affected by the downturn which saw container volumes falling 14% in the second half of the year compared to 2008.

    DIVISIONAL RESULTS

    Freight Rail (TFR): Iron ore volumes railed by TFR increased by 15% to 36,8mt during the year. Due to the downturn volumes in TFR’s general freight business, its largest cash generator, slipped 7.4% to 77,2mt, while coal decreased 3% in export volumes, which Transnet attributed to operational issues including derailments. The report did not specify the actual volume involved. Revenue increased 12,6% to R18,7 billion, whilst EBITDA rose 11% to R5,7 billion for the year.

    Rail Engineering (TRE): TRE increased its external revenue by 32,9% to R1,4 billion due to the increased coach business for PRASA.

    National Ports Authority (TNPA): The port authority delivered a 3,9% improvement in revenue to R7,1 billion. EBITDA increased by 1,2% to R5,2 billion for the year. Port infrastructure investment increased 55% increase to R4,2 billion.

    Port Terminals (TPT): A sharp fall in container volumes over the second half of the year saw only a marginal increase of 4% in revenue to R5 billion. Container volumes for the year declined by 0,2% compared to the previous year after having shown strong growth in the last five years. EBITDA fell 6,5% to R1,7 billion for the year.

    Pipelines (TPL): Volumes increased 5,6% during the year and together with a 4,6% tariff increase enabled revenue to increase by 13,2% to R1,5 billion. EBITDA increased 6,7% to R1,0 billion for the year. The investment in the new refined products pipeline has continued with R2,7 billion being spent on this project during the year.

    The disposal of non-core assets, a programme designed to enable Transnet to focus on freight transport and logistics, saw the sale non-core properties worth R191 million. Other entities sold included Shosholoza Meyl, South African Express Airways (Pty) Ltd and Autopax Passenger Services (Pty) Ltd.

    Mr Wells said that apart from proceeding with the R80,5 billion investment plan, Transnet’s focus will be on pursuing cost savings; safety and environmental management; as well as productivity and operational efficiency improvements.

    Highlights

    • Revenue up 11,6% to R33,6 billion
    • EBITDA up 3,0% to R13,2 billion
    • Cash generated from operations up 2,6% to R13,5 billion
    • Net R11,6 billion funding raised
    • Asset base increases 20,1% to R118,5 billion
    • Capital expenditure up 22,8% to R19,4 billion
    • Disposal of non-core assets largely complete
    • Growth strategy impacted by downturn, still relevant and positioned for growth


    You can read an abridged Transnet financial report HERE



    NSRI launches new rescue boat

    The National Sea Rescue Institute East London took possession of a new Rodman Class rescue craft named Spirit of Lotto at the NSRI rescue base on the Buffalo River, Port of East London on Saturday, 27 June.

    The rescue craft was made possible thanks to a sponsorship of R7.5 million from the National Lottery. “The launch of NSRI East London's new rescue craft Spirit of Lotto, generously sponsored by the National Lotteries Board to the handsome sum of R7.5m, is a milestone in the history of the NSRI, immensely increasing our sea rescue range and capabilities on this notoriously treacherous stretch of coastline to as far as Port Edward, up coast, as far as Port Alfred, down coast, and to 200 nautical miles out to sea,” said Ian Wienburg, NSRI CEO.

    Spirit of Lotto is the second Rodman Class rescue craft launched in South African waters, the first being the very successful Spirit of Vodacom operating out of Cape Town’s Table Bay harbour. The Rodman Class rescue craft has been custom built to the exact specifications dictated by NSRI Headquarters to suit South African sea rescue standards and requirements.


    Further west along the coast the NSRI Port Elizabeth station launched its rescue craft Spirit of Toft to evacuate a 33-year old Filipino sailor Ino Gervise who had sustained a compound fracture of his left tibula and fibula aboard the car carrier KYFRIGG, which had sailed earlier from Durban and was en route for Luanda in Angola.

    The injury occurred on Thursday night while the ship was opposite East London when the ship listed suddenly causing the seaman to be flung across the bridge. East London was unable to assist owing to the port’s closure because of the severe weather condition, but the patient’s condition was monitored by radio telephone while the Kyfrigg headed towards Port Elizabeth.

    The NSRI rescue craft met up with the ship about 5 miles offshore of Port Elizabeth and a medic went on board the vessel to first stabilise the patient before the transfer was attempted. On assessment it was decided to request a helicopter evacuation - seas were running at 5m swells at the time with winds gusting to 45 knots, and a BK-119 helicopter from Port Elizabeth’s South African Air Force 15 Squadron flew to the ship where a basket was winched down to the medic on board the ship, together with a NSRI swimmer.
    The patient was subsequently lifted into the hovering helicopter and flown to a Port Elizabeth hospital in a serious but stable condition.

    The NSRI rescue craft remained on station near the ship until this operation was completed.

    Earlier in the week the NSRI Agulhas station responded to the scene 2 miles offshore of Struis Baai where the skipper of a long line fishing trawler, the Golden Eagle had suffered head and facial injuries after a steel door slammed shut in high winds, hitting him on the head. The rescue craft safely evacuated the injured man and transported him ashore where a local doctor was able to treat him.



    Navigational warning as containers washed off Safmarine ship

    A navigational warning has been posted after 21 containers were washed overboard from the Safmarine container ship SAFMARINE MERU (50,686-gt, built 2006) in the big storms that struck the Cape coast last week.

    Two tank containers of hazardous chemicals (cresylic acid) that washed up along Cape Town’s Sea Point and Camp’s Bay, beached on Thursday 25 June but were quickly removed while a third was reported as being seen in the sea near Hout Bay. Safmarine announced it had appointed Svitzer Salvage to locate and recover the missing boxes.

    The remainder of the missing containers were said by Safmarine to contain non-toxic cargoes, with 17 loaded with timber and general cargo and one container being empty.

    The 4,145-TEU Safmarine Meru is deployed on Safmarine’s South Africa – Far East service and was battling gale force winds in seas of 12m swells when the containers were lost at sea. The 292m long ship was heading for Cape Town at the time.



    News from the shipping lines

    Peter Deilmann Cruises, the German cruise operator well known in African waters for the cruise ship DEUTSCHLAND (22,496-gt, 520-passengers), which in recent years has become an annual caller, has announced that its river cruise division will close at the end of the present summer season.

    The river cruise division was declared insolvent (placed in receivership) on 25 June, with the company blaming the economic downturn with a subsequent decrease in passenger bookings and fluctuating exchange rates as the reason for its demise.

    All river cruises planned for the current European summer season will go ahead as planned but in October Peter Deilmann Cruises intends selling off the fleet of nine river cruise vessels. The company is headed by Hedda and Gisa Deilmann, Peter Deilmann’s twin daughters.

    The cruise ship Deutschland is safe for now and will continue operating, according to the company. There is even some talk of a second deep water ship in the near future.


    The Taiwanese container carrier Evergreen Line intends withdrawing 31 of its container ships from service with the majority going for scrapping in an effort at reducing what Evergreen’s chairman, Chang Yung-fa describes as a gruesome excess of container vessel capacity.

    The ships listed for scrapping are 20 G class and 11 GX class vessels, built between 1983 and 1988. In addition chartered vessels among the fleet are to be returned to their owners once their current charters expire. A while ago Evergreen announced it was holding off from ordering new builds because of the economic downturn.

    “The reckless ordering of newbuildings and the slump in the global trade have combined to send the world’s liner operators into a tailspin,” Chang was reported saying at the time. “In order to rectify the gruesome situation even by a little, Evergreen will implement a program of scrapping a large number of vessels beginning this year.”


    US carrier Swire Shipping intends cancelling its Eastabout Round-the-World Service which is carried out by four 1,800-TEU container ships. The final operation began with the PACIFIC MAKASSAR sailing from Jakarta on 23 June and from Houston on 26 August. Swire recently announced the doubling back of this service via the Cape of Good Hope, sailing directly from Singapore and Jakarta to the East Coast of North America via the Cape. However, rapidly rising bunker costs have rendered even this option to be unviable. A previously announced Europe – Pacific service has also been withdrawn.



    Piracy news – Seacom cable delay blamed on Somali pirates

    Somali pirates are being held responsible for a one-month delay in implementing the new and long-awaited Seacom telecommunication cable that is said to provide improved and cheaper internet connectivity.

    Seacom’s CEO Brian Herlihy says the planned 23 June switch-on has had to be delayed by about a month because piracy made it difficult for the cable-laying ship to operate in pirate sensitive waters.

    However it is also reported that the cable laying in the area affected by piracy has already been completed. The actual reason for the one month delay has not exactly been spelled out.



    Trade news – Invicta acquires Criterion Equipment

    Invicta Holdings Limited, has extended its capital equipment operations with the recent acquisition of 100% of the share capital of Criterion Equipment (Pty) Limited.

    “The acquisition of Criterion Equipment, which was effective from 1 June 2009, expands Invicta’s engineering and capital equipment product portfolio and extends the company’s service to a broader customer base,” says Tony Sinclair, CEO, capital equipment division of Invicta Holdings. “Criterion Equipment, which was previously owned by Murray & Roberts, Old Mutual and the J&J Group, has traded in South Africa for nearly 40 years as distributors and hirers of TCM forklifts and more recently, specialised Jungheinrich warehousing equipment.

    “There will be some re-structuring of Criterion Equipment over the next few months to re-establish the company as one of the leaders in the forklift market in South Africa.

    “Invicta will maintain the existing Criterion name and is committed to improving the distribution service and support to TCM forklifts, which are imported from Japan, as well as German manufactured Jungheinrich warehousing equipment.”

    Invicta Holdings Limited, with annual sales in excess of R4,5-billion, has been a Top 100 JSE listed company for the last 14 years consecutively – the only JSE company to achieve this accolade.

    Invicta’s products fall into two main categories – engineering consumables (bearings and power transmission components) and capital equipment (agricultural and construction machinery). With the acquisition in 2007 of Tiletoria, Invicta also has interests in the floor and wall tiles sector.



    Pic of the day – FJELL



    The Dutch heavylift vessel FJELL (15,071-gt, built 2001) which arrived in Cape Town harbour at the weekend to take bunkers. Picture by Aad Noorland



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