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.”