Transnet will hive off non-core business

KEVIN MAYHEW
TRANSNET IS to stake its future on being a dedicated freight rail, port and petroleum pipeline operator, according to the transport conglomerate’s chief executive, Maria Ramos.
Announcing the group’s results which reflected a dramatic R6,332bn loss (R421m the previous year), Ramos conceded that it had underperformed despite a 6% increase in its turnover of R43,6bn. To address this it is to adopt a four point turnaround plan. Redirecting the business towards excellence in the three identified areas of competence was fundamental to this strategy.
“We must stick with what we are good at, what is our core business and then work to remove the other operations from our responsibility in a structured way,” she explained. For this reason SAA - which had reached a stage of technical insolvency during the last financial year (due mainly to the depreciation in the rand) but was saved by a multi-billion rand lifeline from the government - would remain its responsibility until it could be effectively removed from the Transnet stable.
The three chosen areas of focus performed significantly better than the overall Group. Turnover increases in these areas were Spoornet (13%), National Ports Authority (12%), South African Port Operations (26%) and Petronet (21%).
“Transnet is the custodian of port and rail infrastructure in South Africa. This is the area of our core expertise and Transnet’s primary business focus going forward.”
Its new structure will include a separate division focused on inter-modal co-ordination to ensure seamless integration between rail and port. Non-core operations such as its aviation element will be housed in an investment portfolio for potential future sale or disinvestment.
Other areas earmarked for sale or disinvestment include Freightdynamics, Fleet Call, Marine Data Systems, Virtual Care, Transtel, Autopax and Transet Housing.
l SAA has been one of the key factors for Transnet’s under-performance.
In the year ending March 2003 SAA’s turnover dropped by R1bn, to R16,3bn.
Its loss increased from R6,2bn to R8,7bn.
Only the conversion of a R4bn loan from Transnet into equity on the last day of March prevented the airline from trading in insolvency when its net asset value was R2,5bn in the red.
Khaya Ngqula, previously head of South Africa’s Industrial Development Corporation, has been appointed to head the troubled airline, succeeding Andre Viljoen who resigned last month.