Grindrod doubles its dividend

Cash-flush freight and logistic services group Grindrod has doubled its first-half dividend payout after strong demand for its logistics solutions through its cargo terminals infrastructure footprint.

The industrial transportation group valued at R7.26bn on the JSE reported a 26% jump in headline earnings to R563m for the six months to end-June. Grindrod also raised its interim dividend 100% year on year to 34.4c per share, making for a total shareholder payout of about R147.2m.

Total group earnings before interest, taxes, depreciation, and amortisation (ebitda) were up 16% at R1.1bn while revenue rose 32% to R3.8bn.

Grindrod’s share was 4% higher at R10.40 at the close on Friday, having slumped more than 11% in the past year.

The Durban-based company owns ports, terminals and tankers, as well as trucks that haul everything from food to petrol and animal feed in Southern Africa. Its focus is on growing its footprint, particularly in East Africa.

Owing to SA ports inefficiency, the company has in recent years opted to increasingly move its cargo through Mozambique, where it invested in expansion and upgrades.

Grindrod handles freight at Maputo port, where it holds a 24.7% investment in the Maputo Port Development Company of Mozambique. It also runs dry-bulk terminals at the ports of Maputo, Richards Bay and Walvis Bay in Namibia.

On Friday, the company said it was reaping the rewards of its investment into infrastructure upgrades in Mozambique, reporting a record performance of 5.9-million tonnes handled at Maputo port as volumes surged 30%.

The group’s Mozambique dry-bulk terminals in Maputo and Matola handled six-million tonnes, up 17% on the prior period.

Grindrod CEO Xolani Mbambo said the group’s rail ambitions were also materialising as most of its fleet of 60 locomotives had been deployed or were in the workshops gearing up for deployment.

Mbambo said the rail leasing business was recently awarded a contract for operating a manganese rail siding in the Northern Cape. It continues to deliver in Sierra Leone, having exceeded the 10-million tonne mark since its inception in February 2021, with expansion plans in the pipeline.

“We have ambitious plans to promote trade in Sub-Saharan Africa and are eager to strengthen our relationships and collaborate with key stakeholders to benefit the continent,” Mbambo said. “Rail will play a pivotal role in achieving these plans.”

This comes as the Eswatini multimodal corridor operation, which provides customers in the Mpumalanga area with an alternative route to Maputo and Matola export terminals, reported 357 trains had moved through the corridor during the first half of the year, 90% higher than the prior period.   

Grindrod is collaborating with Transnet Freight Rail, Mozambique Port and Railways (CFM), Zambia Railways, Eswatini Rail and the National Railway of Zimbabwe on initiatives to move cargo on trains.

This is expected to improve train turnaround times and benefit export customers, according to the CEO. Grindrod made significant strides in re-establishing its rail activities in Zambia through strategic co-operation with Zambia Railways.

The company is focusing on a systematic increase of its rolling stock capacity in coming years in anticipation of an increase in demand. It is also reducing logistics costs for customers.

gumedemi@businesslive.co.za