Transnet’s interim results for the six months ending September 2017 show that the company’s net profit for the period is up by more than 230% compared to the previous year.

According to the company the results were driven by improved operational performance and a slight rise in consumer demand and mineral production output in the country.

The state-owned freight and logistics company results showed that revenue was up 13.8% to R37.1 billion, underscored by a 7.9% increase in general freight volumes; a 6,5% increase in export coal railed volumes; and an 11.4% increase in railed automotive and container volumes.

Contained operating costs

Operating costs at the company were contained at R20.8 billion with a R2.2 billion in savings.

“Although the economic environment largely remains under pressure, Transnet’s strategy to move rail-friendly cargo from road to rail is starting to pay dividends with the company gaining market share in general freight cargo and coal volumes,” said the company.

The company’s key measure of profitability – earnings before interest, tax, depreciation and amortization (EBITDA) improved by 17.7% to R16.3 billion.

“An exceptional improvement was noted in profit from operations after depreciation and amortization which rose by 69.1% to R9.9 billion compared to R5.9 billion in the prior period,” said Transnet.

Rail

The timely delivery of newly-built and refurbished rolling stock to freight rail, coupled with the delivery of locomotives for the 1 064 locomotive programme, and the delivery of  coaches to the Passenger Rail Agency of South Africa by Transnet Engineering has led to an increase in revenue by 29.4% to R4.8 billion in this operating division.

Ports

Revenue increased by 16.1% to R6.5 billion at Transnet National Ports Authority, mainly as a result of increases in cargo dues revenue and the release of claw back provisions  informed by Regulatory decisions.

The company also saw growth in container volumes due to local and international consumer demand.  The demand resulted in a 6.1% increase in container volumes to 2.4 million TEUs (twenty-foot equivalent units).

Pipelines

However, performance was hampered in the pipeline operating division.

“A decline in market demand, for refined petroleum products, as well as production challenges at an inland refinery continue to hamper the performance in the pipeline operating division. Petroleum volumes transported decreased by 2.9% to 8.3 billion litres compared to 8.6 billion litres in the prior period.”

The company was also able to raise R9.9 billion without government guarantees. The funds were raised from development finance institutions (R1.5 billion; commercial paper and call loans  R5.8 billion; export credit agencies R1.4 billion; and domestic bonds R1 billion).

Transnet further announced that it has invested R560 million in the New Multi-Product Pipeline during the reporting period.

“The coastal terminal in Durban (excluding tanks), the 24-inch main pipeline and 16-inch inland pipelines have been fully commissioned and are operational, with four different petroleum products now being transported from Durban to the Gauteng region.”