Transnet on Monday delivered an impressive set of financial results for the year ended 31 March, driven by strong volumes in general freight, export coal and manganese as the company’s road-to-rail strategy gathers pace.
The results confirmed the company’s financial strength and operational endurance in a subdued economic environment.
Revenue for the year under review increased by 5.3 percent to R65.5 billion, up from R62.2 billion in 2016.
Transnet said this was spurred by a 4.9 percent increase in general freight to 88.1 million tonnes, a 2.4 percent increase in export coal volumes to 73.8 million tonnes and a 24.3 percent jump in automotive and container volumes on rail to 9.2 million tonnes.
In addition, Transnet moved a record 12.1 million tonnes in manganese volumes, a 17.5 percent jump from 10.3 mt in the previous year.
The freight and rail agency said this was driven by significant improvements in operational efficiencies, including creation of new loading and off-loading zones and a recovery in manganese prices.
Transnet’s key measure of profitability, earnings before interest, taxation, depreciation and amortisation (EBITDA), increased by five percent to R27.6 billion from R26.3 billion in 2016, surpassing the country’s economic growth rate by more than seven times.
Transnet chief executive, Siyabonga Gama, said a well-defined and diversified funding strategy enabled the company to raise R17 billion for the year without government guarantees.
“Transnet has not tapped into government guarantees since 1998, and the company borrows debt on the strength of its financial position,” Gama said.
“During the year, Transnet proactively and successfully renegotiated R29.1 billion of debt to lower and relax the credit rating default triggers to below sub-investment grade, in view of expected rating agencies’ downgrades.”
The group also evaluated the potential impact of the credit ratings downgrade on its financial position, liquidity and solvency and expects no significant negative effect compared to previous estimates, as the probability of a credit ratings downgrade had already been considered.
Transnet said it continued to execute its infrastructure investment programme, spending R21.4 billion in the year under review. This takes total investment under the Market Demand Strategy (MDS) to R145 billion in the past five years.
Transnet expects to invest a further R229.2 billion, including R20 billion earmarked for mergers and acquisitions to diversify revenue streams through geographic expansion over the next seven years to 2023/24.
The ten-year expectation, dependant on validated demand, is capital expenditure of between R340 billion and R380 billion.
Among the company’s significant investments is the acquisition of locomotives to modernise its fleet in anticipation of a rise in general freight volumes in the coming years.
Transnet concluded locomotive acquisition contracts in 2014, which resulted in the acquisition of approximately 1,319 new locomotives for the general freight business and coal business over the MDS period. Overall, 452 locomotives have been accepted and contracts have been concluded.
– African News Agency (ANA)
