Grindrod declares R1.9bn attributable loss

Grindrod, a leading freight and shipping company, recently reported an attributable loss of 1.9 billion rand in 2016, compared to 1.4 billion rand in the previous year. The company attributes this substantial loss to the challenging market conditions experienced in the first half of the year, as well as impairments in its shipping and freight services rail businesses. Alan Olivier, the CEO of Grindrod, joined CNBC Africa to discuss the financial results and the company's future plans. Olivier highlighted that the decision not to declare a dividend reflects the tough operating environment faced by Grindrod. The company is strategically choosing to exit the non-core rail business, which has been a major contributor to the impairments. With a low gearing of 2% on the balance sheet, Grindrod has room for investment. The company is currently focused on key projects such as building a tank terminal in Kuka and exploring other smaller projects. Olivier disclosed that Grindrod has committed capital expenditure of around $600 to $700 million for the year. The CEO emphasized that the uptick in the commodities market in the second half of the year significantly improved the company's performance. New contracts and price participations in these contracts are expected to positively impact Grindrod's financials in the upcoming months. Olivier expressed optimism about the sustainability of this momentum if commodity markets remain strong. Regarding the factors driving the commodities recovery, Olivier mentioned the impact of infrastructure spending, particularly in the US. He noted that President Donald Trump's plan to invest $1 trillion in infrastructure projects is expected to boost the demand for steel, iron ore, and coal, consequently benefiting Grindrod's shipping business. Additionally, China's push for a cleaner environment has led to a preference for higher-grade iron ore and better quality coal, further driving demand for shipping services. Olivier addressed the challenges posed by fire risks and currency volatility in markets such as Mozambique and the UK. He acknowledged that currency fluctuations impact the company's financials but stressed that Grindrod has a robust policy to manage these risks. The company accounts primarily in dollars for its shipping assets and revenue, with some exposure to sterling in its UK property division. Olivier highlighted the need to adapt to currency fluctuations and manage currency translation risks effectively. In conclusion, Grindrod's CEO remains hopeful about the company's prospects amidst improving market conditions. The strategic focus on key investments and the ability to navigate challenges such as currency volatility demonstrate Grindrod's resilience and commitment to long-term growth.