Transnet shows increased profit despite recession

Thursday, June 25, 2009

Johannesburg - Despite the bite of the economic recession, state owned utility, Transnet, has posted increased profit.

Releasing the results for the 2009 financial year on Wednesday, Acting Group Chief Executive, Chris Wells, said the company increased its profits by 3 percent to R13.2 billion compared to the previous year.

This was on the back of an 11.6 percent increase in revenue to R33.6 billion, Mr Wells said.

Transnet's key role is to assist in lowering the cost of doing business in South Africa as well as enabling economic growth through the provision of ports, rail and pipeline infrastructure.

The impact of the crisis was felt in its general freight business as well as containers where volumes decreased by 19 and 12 percent.

The company's operating expenses increased by 18 percent to R20.4 billion on prior year's levels due to high electricity prices, high petrol prices as well as the high cost of steel. This in turn made the cost of maintenance materials more expensive.

Commenting on the financial crisis Mr Wells said: "It is our view that the 2009 calendar year will continue to be a hard one. It is difficult to see growth assuming that there is no change in the demand for goods."

He further said the retrenchments, judging from financial data that has been released is likely to continue.

"It is clear that more retrenchments will take place, things are going to remain tough for all," said Mr Wells, adding that the parastatal was set on retaining its staff.

Transnet, however, added that despite the global downturn, it will continue with its R80.5 billion infrastructure investment programme over the course of the next five years.

Of this amount 59 percent will be spent on infrastructure related projects, 32 percent in rolling stock and 9 percent in acquiring equipment.

On the matter of acquiring locomotives for coal line expansion, though the process has been delayed by a year due to assembly issues, Mr Wells said that this was on track.

"What is comforting is that by the end of this year about 70 (locomotives) will be delivered. This will increase by about 200 by the end of 2010. This will be a significant boost to the fleet," he said, adding that the current fleet was old and of high maintenance.

Mr Wells said that despite the financial crisis, Transnet still managed to raise the debt capital it required to fund its programmes.

The company raised a net R11.6 billion primarily through issuing domestic bonds, he said.

In March this year, Transnet also signed a R4 billion loan agreement with the Japanese Bank for International Co-operation (JBIC) to fund the widening and deepening of the Durban harbour.