OT: Grindrod (Diversified Dry Bulk) Results/Interview; company profile attached | PLG Message Board Posts

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Msg  4920 of 8689  at  2/22/2008 4:46:07 PM  by

archeptolemus


OT: Grindrod (Diversified Dry Bulk) Results/Interview; company profile attached

http://transcripts.businessday.co.za/cgi-bin/transcripts/t-showtranscript.pl?1203626795

Grindrod ups fleet 30%

 Presenter: David Williams Guest(s): Alan Olivier
- Click here to listen to the interview

Summit TV speaks to Alan Olivier from Grindrod about their results topping R1.19billion, their bigger fleet of ships and their export facilities at the port of Maputo


DAVID WILLIAMS: Welcome to Face to Face. I’m talking to Alan Olivier, chief executive of shipping and logistics company Grindrod. Alan, you’ve had results again - Grindrod is a company that’s sometimes under the radar because so much of what you do is not in South Africa, and it’s not household name stuff - so it’s important to look at what you’ve done. There’s a 19% increase in earnings to R1.19billion so it’s a big scale company - what’s happened behind that number in the last year or so?

ALAN OLIVIER: It was a good result - clearly the shipping markets were very strong in 2007. We obviously grew profits substantially of that base and off those good rates. But there were some negatives in the year - earnings on the ships were good, but we had a contract base behind that which was contracted during the previous year at slightly lower levels before the market really rallied during 2007. That obviously put a cap on the earnings. There’s a loss in the South African parcel service in Island View Shipping which was the one negative we have on the shipping side of the business. The freight service side of the business did well - again there was one soft area that we explained at the half year when we were closing down a business we decided was no longer core, and there were substantial costs in winding that down. Otherwise the businesses ran very well during the year - the result was we were nearly 20%.

DAVID WILLIAMS: Shipping is the heart although you’re doing interesting other things as well. They say business is all about timing, but in your business it’s especially about timing isn’t? It’s when you sign those contracts that can take you through six, eight or 10 years. You’ve battled a bit with some of the contracts, but the market is at as place where the contracts you sign now are going to stand you in good stead later - how does that work?

ALAN OLIVIER: That’s absolutely right. The contracts I was referring to were largely one year contracts - they were fixed at the end of 2006 for the 2007 calendar year. Those have all largely run off and they’ve been renewed - and in renewing them there are some fixed contracts in there that are really hedged against ships that we operate in the international markets. But some of them are linked contracts so they will move with the markets - so if the markets increase they will increase, if the markets come down they will come down - but obviously we’ve got our trading margin within those. The loss that we had in our South African operation shouldn’t re-occur in the future.

DAVID WILLIAMS: The fleet of ships 39 to 52 is the increase - that’s about a third. A big investment - what’s behind that at this time?

ALAN OLIVIER: It is a big investment. Largely those ships are options that we’ve exercised from the building programme we commenced some years ago - so the pricing on those is still good in terms of today’s market, in fact very good in some instances in terms of today’s market. Prices are very high today so expansion beyond that is going to be more difficult - pricing is very high, and getting long term yields out of high value assets is going to be far more difficult. So at the moment yes we still have a third growth to come - which is good - but we are going to be restricted beyond that and we’re going to have to look for opportunities in the market to continue to grow our fleet.

DAVID WILLIAMS: South Africa is a maritime country and sometimes we forget - perhaps the years of isolation - there’s shipping lanes and routes, how the whole world shipping market works. What’s happening in that market and how does it affect you?

ALAN OLIVIER: The South African market is obviously being impacted by the high demand for commodities, particularly commodities that South Africa has like coal for instance and steel products and other mineral products - and also iron ore to an extent as well. These commodities are under huge demand at the moment - there’s a shortage of many of those commodities, and there’s a shortage of shipping that’s driven the rates. That’s really what we’ve benefitted from - the huge demand for commodities.

DAVID WILLIAMS: What about the other bits and pieces? I'm not saying they’re small, but they’re not the same scale as the shipping. Maputo is an interesting operation - in effect what you’re doing is taking over and running that harbour?

ALAN OLIVIER: In effect together with Dubai Ports World (DPW) we are going to be controlling the operation of that port going forward. The reason for that is we wanted to get into control of it - we believe it has huge potential and the only way to actually achieve the potential of that port is really to get in control of it. That’s what we’re going to be doing together with Dubai Ports…

DAVID WILLIAMS: It’s not just the port - one sees the strategy of not just running the ships but the port, then there’s the rail operation where you actually do the rail refurbishment yourself in the port - so Grindrod is extending its reach…

ALAN OLIVIER: Yes, we have. We’ve also developed some of the terminals in the port - we’ve got a car terminal, a ferro terminal on the other side of the bay and there’s the Matola coal terminal. Then you refer to rail - we’re obviously refurbishing that terminal to try and increase the capacity of that coal terminal. Linked with that is the rail line which had to be refurbished by the Mozambican government themselves. We believe we are just about there now and the first big trains of coal should be going through to the terminal in the next few weeks. It’s been a long time coming so that will be good.

DAVID WILLIAMS: It seems ironic that you’re doing it in Maputo - why not Durban, East London or Port Elizabeth?

ALAN OLIVIER: None of those ports are really conducive to expansion of bulk. Obviously Richards Bay is there, but Richards Bay really is almost at capacity. Durban is largely a container terminal and Cape Town is a long way away from the marketplace. Maputo is very well situated to where the commodities come from - it’s a shorter haul than Richards Bay which is the biggest bulk port - therefore the potential is very good.


www.summit.co.za




Transcripts: onsub1@johncom.co.za

http://www.grindrod.co.za/about.aspx

Today, a world class shipping & freight logistics operation

Vision:

To achieve “blue chip” status as a transportation group through sustained earnings growth from separately listed international shipping operation and South African based Trading, Freight and Financial Services businesses.

Mission:

To provide a worldwide range of high quality shipping services through ownership, charter, pooling and operation of a diversified fleet of modern ships.

To be the first choice provider of a broad range of Trading, Freight and Financial services from a predominately Southern African base

A few Grindrod facts:

  1. Grindrod is listed on the JSE Securities Exchange South Africa where its shares are quoted in the Transport sector.
  2. The group’s head office is in Durban and it maintains a strong operating presence at each of South Africa’s major ports as well as in Johannesburg, Mozambique, Angola, and Namibia.  Grindrod also has offices in London, Spain and Singapore and Dubai.
  3. Grindrod Limited employs 5000 skilled and dedicated people and controls assets in excess of R7 billion, generating annual revenue of over R12 billion ands an annual profit exceeding R1 billion.

The Group has grown in size and stature, modernized its operations and adopted an entrepreneurial decision making approach. International and local partners have been introduced, including black empowerment initiatives.

Shipping

The purchase of Island View Shipping in 1999 gave the group a major dry bulk business, adding a significant new facet to the Group’s shipping services – Capesize and Panamax vessels were now on charter to compliment traditional business in the Handy size market.

IVS is currently South Africa’s most prominent bulk ship owner and operator, and continues to take delivery of ships contracted in the past at favourable rates.

Unicorn Shipping is South Africa’s largest and oldest national ship owner with roots dating back to the 1860’s.

In addition to owning ships, Unicorn operates mainly in the chemical and product tanker markets and has a number of newbuildings on order at favourable prices.

The group’s shipping services boast large, modern fleets, sound expertise, good customer bases and firm partnership relationships.

Freight Services

Grindrod’s Freight Management operations encompass a major share of the local ships agency business, sea freight logistics and land freight logistics.

Grindrod’s Ships Agency is a leading player in its field offering many worldwide ship operators a broad spectrum of services in South Africa, Namibia, Mozambique, Malawi, Zimbabwe, Botswana and Swaziland.

The Seafreight Logistics business, Ocean Africa Container Lines, in partnership with Safmarine, operated a feeder service around the Southern African coast.

The landbased operations are focused on terminals, intermodal solutions, rail, port operations and all facets of traditional logistics, i.e. international freight forwarding, contract logistics and specialized industry-solutions (automotive, projects, furniture, perishables).

Bulk Product Trading

The Bulk Product Trading division trades in the following commodities: agricultural, industrial raw materials, marine fuels and lubricants.

Financial

The group’s vision is to grow Grindrod Bank (previously Marriott Corporate Property Bank) into a substantial South African empowered bank.




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