Grindrod expects earnings growth

Although we are now in
rather gloomy times in 2009,
Grindrod Limited management
and shareholders are pretty
happy with the excellent base
provided by a very healthy
balance sheet for 2008.
SA’s major shipping
company logged revenue of
R33.74-billion in the 2008
financial year ending December
31, a whopping 88% up on the
R17.95-bn turnover in 2007.
Trading profit almost
doubled – up 91% to R3.03-bn
in 2008 compared to R1.58-
bn in 2007. Operating profit,
meantime, more than doubled,
up 104% to R2.79-bn from
R1.37-bn.
The year’s net profit was also
up by 76%, declared as R2.27-
bn in 2008 compared to R1.29-
bn in the previous year.
The company’s shipping
division – focused on drybulk,
tankers and ship operating
activities – had an exceptionally
strong performance in 2008,
said the annual report, with
attributable income up 83% on
2007.
Earnings from tankers
increased due to revenue
contracted at favourable rates
and an increased fleet, while
drybulk earnings more than
doubled mainly as a result of
significantly higher earnings on
the chartered in handysize bulk
carriers open to the spot market.
But signs of the tight times
were apparent by year end, with
the drybulk shipping market
experiencing the sharpest drop
in history during the fourth
quarter of 2008.
According to Grindrod
Limited CEO Alan Olivier,
this significant drop in both
earnings levels and asset
values was triggered by the
credit crisis.
The freight services division
reported substantially improved
results particularly in the
terminals, intermodal and ships
agency operations.
Looking at the prospects for
2009, Olivier told FTW that, in
spite of the current economic
outlook, earnings growth is
anticipated from the trading,
freight and financial services
businesses.
“There will however be
a decline in the shipping
division’s profitability.
Consequently, the group
expects a reduction in earnings
in comparison to the ‘super
profits’ achieved in 2008.”