Photo by: Duane Daws
State-owned freight logistics group Transnet said on Wednesday that double-digit increases in railed automotive and container volumes help lift revenue for the interim period to September 30, 2014, to a record R30.3-billion.
Revenue was 6.4% higher period on period, with railed automotive and container volumes increasing by 14.3%.
However, profit for the period was lower at R2.1-billion (R2.9-billion), owing to a combination of higher depreciation and financing costs and a R653-million impairment charge, which related mainly to the retirement of 26 locomotives during the last six months.
Overall rail volumes rose by 4.4% to 110.5-million tons, ahead of South Africa’s weak economic growth, but lower than volume targets set in the group’s Market Demand Strategy (MDS). South Africa's gross domestic product was expected to expand by only 1.4% in 2014.
Under the MDS, Transnet planned to invest more than R312-billion to increase volumes handled by its rail, ports and pipeline businesses.
Speaking at a presentation in Esselen Park, east of Johannesburg, CEO Brian Molefe stressed that the group would press ahead with its “counter-cyclical” investment plan, having invested R18.7-billion on capital projects in the six-month period.
The capital expenditure figure was 66.8% better than investment levels achieved for the same period during 2013 and Molefe said it reflected that the MDS, which was in its third year, was “kicking in”. Rail investments comprised 76% of the total, followed by ports at 10%.
But the subdued economic conditions, together with operational problems, had affected its commodity businesses, with both coal and iron-ore prices having softened materially during year.
The coal line to Richard Bay, in KwaZulu-Natal, increased volumes by 4.3% to 43.7-million tons during the six-month period, but Transnet still expected to rail 74.2-million tons for the year as a whole, which would be a 9% year-on-year increase.
Iron-ore volumes along the Sishen-Saldanha corridor rose 3% to 27.9-million tons, with 57.1-million tons being budgeted for the year as a whole.
Molefe said the transition to ten-year take-or-pay contracts on the iron-ore and coal corridors should lower its volume risk in the face of potentially difficult commodity markets.
In contrast to railed container volumes, maritime container volumes fell 4% to 2.3-million twenty-foot equivalent units and the group was expecting volumes to be 2% lower for the year as a whole.