Slowdown hits Transnet

Johannesburg - The recession has taken its toll on Transnet, which reported a 23% slump in net profit for the six months to end-September.

Transnet apparently tried to put a positive spin on its results, preferring to use earnings before interest, taxation, depreciation and amortisation (Ebitda) and reporting "marginal growth in profits to R6.6bn".

Interim revenue rose by 3% to R17.3bn, while headline earnings fell 28% to R1.3bn because of higher depreciation and interest charges, Transnet grew its cashpile to R6.5bn from R5.9bn at the end of March and from R2.6bn in September 2008.

"This credible performance has occurred despite the sharp fall on commodity and container volumes occasioned by the ongoing recession," said Transnet in a statement. It said revenue growth was "restricted" by the economic recession and its negative impact on commodity volumes generally.

Volumes handled by its general freight business dropped 17.6% for the six months to end-September and container volumes declined by 12.9%.

"We are seeing some green shoots; for example, the general freight business, experienced its best month in September 2009," said acting chief executive Chris Wells. "Still, we think it is too soon to be confident of steady volume growth. It is early days for these to come through in volume growth."

Transnet has increased its capital expenditure programme by 5.4% to R8.7bn compared to the previous period. It said it was continuing with its planned R80bn capital investment programme, as it was optimistic about "the resilience of the economy and its ability to overcome the recession".

In the first six months, the parastatal raised nearly 90% or R13bn of its required funding for the full year to March 2010. Transnet said it still had "significant capacity" to increase its gearing ratio from the current 37% as it was well within its gearing target of 50%.

- Fin24.com