Grincor stages phenomenal turnaround

9 Mar 2001 - By Staff reporter

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Terry Hutson

GRINCOR HAS reached calmer seas after the turbulence of 1999, earning profits of R74,4 million or
65,2 cents a share for 2000, compared with a loss of
R66 million (57,9 cents loss) the year before.
According to managing director Ivan Clark, strong management action saw revenue climb 49% to R1,47 billion (1999: R989 million). If other equities were included this figure would have topped the R2 bn mark, he said. This has laid the foundation for the group's continued growth as a major player in the freight and logistics sector in SA.
Operating income before interest and tax rose to R136,5 million, from a loss of R36,89m the year before. The company has declared a 15-cent dividend on top
of a half-year dividend
of 5 cents.
This has been a phenomenal year for us. We have turned the group around from a loss position to earnings of R74,4 million and virtually all our divisions have contributed to these remarkable results.
The big earners were the Unicorn coastal liner and ship owning divisions, which were supported by improved shipping markets, good contracts and the reliability of vessels, which enabled Grincor to secure higher dollar charter rates. The depreciation of the local currency helped matters further when dollars were converted into rands.
Quadrant Line had performed satisfactorily, but Island View Shipping, one of Grincor's recent acquisitions, found itself caught in stormy waters, with high charter rates and bunker costs having a negative effect on the cost of transporting contracted bulk cargoes. However, says Clark, those contracts have since either expired or been renegotiated at more favourable rates, while bunker prices have improved.
Other good performers include the ships agency businesses in the Freight Management Division, which otherwise was an overall lossmaker. This
was mainly because of
the wind-up of Grindrod Freight Logistics. Grindrod Container Services fared well despite facing difficult trading conditions.
Clark said that Grincor's joint ventures with major international partners, P&O Grindrod Logistics and Ršhlig-Grindrod, provided only limited earnings after bedding down, but these have contributed in expanding the customer base with the ability to provide specialised land, air and sea transport solutions.
Another satisfactory performer was Auto Carrier Transport, in which Grincor acquired a 50% share in June 2000.
The sale of ships had not been completed by year-end as planned. Since then however we have sold and delivered one ship and concluded the sale of another, which will realise approximately R80 million. We are busy negotiating the sale of another two multi-purpose ships which is expected to bring in another R80 million.
Grincor has contracts to purchase three newbuilding handysized carriers from a Chinese shipyard on a 50/50 joint venture with an international ship owner.