SIMON BROWN: I’m chatting with Xolani Mbambo. He is CEO of Grindrod Freight Services, however will likely be Grindrod group CEO from January 1 – now CEO designate, I suppose. Results for the six months ending June. From core operations income up 31%, headline earnings up 53%, and a dividend of 17.2%.
Xolani, I admire the time right now. First query. Global provide chains, of which clearly Grindrod is an integral half – are they bettering or are issues beginning to get again to regular?
XOLANI MBAMBO: In a time we predict they’re getting again to regular, sure occasions come via. But what we’re seeing is that they nonetheless stay comparatively constrained. The container scarcity remains to be impacting world provide chains. So sure, I believe we’re nonetheless seeing some constraints. One hopes that at some stage the logistics provide chain globally will unwind and normalise.
SIMON BROWN: I take your level round different issues taking place. You had the floods, there was the fireplace at Richards Bay. There have simply been the opposite curve balls – though listening to the presentation across the results and searching on the numbers themselves, neither of these had been main setbacks for the group.
XOLANI MBAMBO: Absolutely. If you localise the problems by way of transferring away from the worldwide provide constraints, and also you localise it again into our enterprise, in fact we had large challenges. You know very nicely concerning the hearth in Richards Bay, which implies at this stage we don’t have a convertible … hyperlink for our facility. We had large floods in Duran, which impacted our Durban container … amenities. We managed to get again inside two weeks, which was actually, actually good of the crew. And in Matola we had 20 days of not loading the vessel due to an incident that we had on the quayside. With all of those, the groups have [worked] very onerous to make it possible for we return to normalcy and the volumes that we’ve achieved are on the backdrop of these challenges. So I’m fairly happy with what the groups have achieved.
And in fact the markets are in our favour, so we’ve acquired some tailwinds and I say, nicely the aircraft … on the advantages from tailwinds, if it’s up within the air, proper?
SIMON BROWN: [Chuckling] Fair level. And robust port terminals. It’s robust throughout the board – ports and terminals. How a lot is base impact, due to course the comparable interval nonetheless had some lockdown versus type of growing capability, and maybe you might be simply seeing growing demand out of your prospects?
XOLANI MBAMBO: Absolutely. But in the event you look again, I’m fairly inspired as a result of we began seeing this pattern of this quantity uptick from the second half of final 12 months. If you recall in 2020, once we had a lockdown, sure, we noticed the huge melancholy in quantity efficiency. But final 12 months within the second half of the 12 months we began seeing an uptick after we carried out large operational excellence methods and upgrading our gear. And with the markets coming via, we had been then in a position to reap the benefits of that. So we noticed an uptick in quantity within the second half of the 12 months, and we’re seeing an uptick within the first half this 12 months, which is a continuation from that.
So I’m fairly happy with what we’ve completed to date.
SIMON BROWN: Your car volumes? Are we seeing that pickup? We’ve had points with provide chains due to chip shortages. When I communicate to the likes of Combined Motor Holdings, they simply can’t get sufficient to promote. Is that coming again to regular, or are there nonetheless some challenges in that house?
XOLANI MBAMBO: As you already know, we’ve truly exited the vehicle-transportation enterprise, which was a road-transportation enterprise. What stays in the mean time is our automotive terminal in Maputo. That terminal – what we seeing is it’s benefiting so much from the elevated demand of the second-hand automobiles into the terminal. And secondly, we’re additionally seeing a rise within the trans-shipment of these second-hand automobiles going out into Africa.
Thirdly, in the event you recall, final 12 months we had the LNG challenge, the place we ended up dealing with the challenge cargo, and we use this facility automotive terminal to truly deal with a few of that challenge cargo, and we’re seeing that type of persevering with going ahead. We benefited positively within the first of this 12 months on the challenge cargo. So that’s what has pushed the 30% development in our automotive terminal, which may be very pleasing.
SIMON BROWN: You confirmed a picture throughout the presentation with you and your colleagues across the numerous totally different commodities, and type of your tackle it. In specific coal – it had the crimson dot subsequent to it. Not bullish long run. Is my understanding appropriate on that? Is that not bullish by way of maybe the pricing, however the demand is there? You are growing capability at Maputo.
XOLANI MBAMBO: query, Simon. What occurred is once we acquired the increase we’ve all the time had our coal terminal facility at 1.2 million tonnes capability. But in the event you take a look at the numbers, we’ve all the time stated that that capability is scalable, which signifies that we are able to reply if market circumstances enhance. And we actually noticed that and we responded accordingly. We invested over $6 million in that facility. The payback has already been achieved; it was half a 12 months’s payback, and we at the moment are sitting at 4.5 million tonnes of capability. We are lately hitting a run fee of 300 000 tonnes a month.
Now, coming to your query, why are we having a crimson dot? It’s about the actual fundamentals of coal. As you already know, this story is round inexperienced[ing], and many others. We really feel that, based mostly on that, as quickly as there’s a breakthrough in renewables as a base load for energy provide, coal and … fossil fuels for that matter will likely be underneath strain. So it’s on that foundation that we’re placing a view.
Of course there’s a special view out out there that claims what they name a simply transition from fossils to non-fossils will take longer. So we’re observing and, in fact, if we’re unsuitable, that wouldn’t be unsuitable for us as a result of then it means we’ll have longer participation on this commodity.
SIMON BROWN: I take your level on that. A fast final query. Grindrod Bank being offered to African Bank – any replace or any thought round timelines?
XOLANI MBAMBO: The transaction is progressing very nicely. We are happy with the place we’re. We’ve acquired just a few questions, nothing insurmountable, from the authorities by way of that. If you ask anybody, we pray and hope that by the top of the 12 months the transaction [will be] concluded. Possibly it could possibly go [further], however I’m very optimistic with the progress that I’m seeing thus far.
SIMON BROWN: Okay. That’s pretty fast timelines. We’ll depart it there. Xolani Mbambo, CEO designate of Grindrod, I actually admire the time right now.
XOLANI MBAMBO: Thank you.
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