GNDE - Grindrod hopes for growth in strong market

25/04/2003 10:13:54

Chairman undaunted by rand, expenses
KwaZulu-Natal Correspondent

DURBAN The strength in world bulk shipping markets and the growth in existing businesses would boost shipping group Grindrod to positive growth in the current year, chairman Murray Grindrod said in the annual report.

His optimism comes despite the recent appreciation of the rand against the dollar and as the group consolidates its market position and beds down its R700m capital expenditure on three products carriers in the year ahead.

Grindrod released its third consecutive year of growth in February, despite dealing in strained local conditions and international shipping markets that remained depressed for most of the period.

The group joined a large number of international shipping companies that were hammered several years ago when international markets crashed. Subsequently, the group has expanded its dependence on shipping into logistics and related maritime businesses.

Grindrod said the freight management division grew substantially with a broader product mix and improved market share. The division was now "a substantial contributor" to profitability and would continue seeking further growth in the freight logistics field this year.

The group also completed the expansion of the Richards Baybased Kusasa Bulk Terminals project that would service the export of heavy mineral products.

A rail tippler and support facility was under construction adjacent to the Kusasa site to service a major manufacturer.

Grindrod said this development, along with further planned ones, would see the export node provide long-term benefits to the group's terminal business.

MD Ivan Clark said the group committed R140m on capital expenditure last year, followed by two more tranches of R480m and R120m. He believed Grindrod had reached its balance sheet and current funding limits.

However, he said that the group did not invest in new ships without anticipating a 12% dollar return on the investment.

In this light, the current year would be one of consolidation and Clark expected real growth to level out after the R75m, R120m and R165m achieved respectively in the last three years.

In the year to December, headline earnings rose 43% to 174,9c a share and a 26c final dividend brought the annual total to 40c (2001: 28c) a share. Revenue grew 23% to R2,2bn.

Clark said the group took advantage of low markets last year to raise its owned and chartered fleet. The unprofitable Quadrant Container Line was closed and full provision made for discontinuation costs.

Unicorn Shipping completed its planned dry cargo fleet replacement programme as well as placing orders for the three products tankers. Island View Shipping grew its chartered fleet during the year.

Apr 25 2003 07:02:13:000AM Nicola Jenvey Business Day 1st Edition

25 April 2003

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