South Africa’s gradual increase in economic activity has had a positive impact on Transnet’s revenue streams, its latest financial results have shown.
The logistics company’s interim results for the six months to September 2021 reflect a double-digit 10.5% increase in revenue to R35.4 billion, mainly due to improved economic conditions. Revenue for the same period in 2020 was R32 billion. The parastatal released its latest financials on December 29, 2021.
According to Transnet’s financial results performance overview, the revenue increase was in line with increased petroleum and container volumes and increased revenue at freight rail due to the volume mix, which benefited from higher-yielding volumes relating to the general freight business.
The mining sector recorded growth of 1.9% in the second quarter of 2021, a marked improvement from the 73.1% contraction in the previous period. The agricultural sector grew 6.2%, which was less than the 15.1% growth in the second quarter of 2020.
“This shows a gradual increase in economic activity in South Africa, which has had a positive impact on Transnet revenue. Net operating expenses decreased by 0.4% to R22.1 billion due mainly to the impact of the third-party settlement received in lieu of all future claims against this party, partially offset by fixed cost increases which were contained by cost-saving initiatives,” the financial overview noted.
Earnings before interest, tax, depreciation and amortisation (Ebitda) increased by 35.0% to R13.3 billion (2020: R9.8 billion), with a resultant increase in the Ebitda margin to 37.5% (2020: 30.7%).
Profit from operations after depreciation and amortisation more than doubled to R5.9 billion (2020: R2.8 billion), a marked improvement from the September 2020 results.
“Impairment of assets, amounting to R820 million (2020: R538 million), is primarily due to the impairment of property, plant and equipment, mainly from derailments and the valuation exercise carried out on port operating assets,” the report said.
Profit from operations before net finance costs increased significantly to R5.1 billion (2020: R1.1 billion). Net finance costs decreased by 9.3% to R5.1 billion (2020: R5.6 billion), resulting from the decision to use cost-effective short-term facilities, while longer-term funding is being negotiated.
The tax expense of R69 million (2020: R1.2 billion income) related to deferred tax. The increase in the deferred tax expense arose mainly due to Transnet’s reduced calculated tax loss.
“This resulted in a loss after tax of R78 million (2020: R3.4 billion loss), a 97.7% decrease from the prior period, and a sign of recovery from Covid-19-disrupted operations, although the third and fourth wave impact of the virus is expected to affect this recovery further in the second half of the financial year,” the results noted.
Transnet’s B-BBEE spend for the period amounted to R11.31 billion, with the parastatal retaining its Level 2 B-BBEE contributor status. A total of 1.9% of labour costs were spent on training, focusing on artisans, engineers, and engineering technicians.
