Wednesday, January 19

Transnet results ‘are not as bad as expected’, says Derby

The CEO of the Transnet group, Portia Derby, says that while the group’s latest financial results are “bad”, things could have been much worse if the administration had not taken steps to mitigate the impact of the financial consequences of Covid- 19 last year.

“The poor results were not the reason for the delay [in publishing the full-year results to March 31, 2021]. In fact, the results are not as bad as expected, ”he said during a press conference on Friday night.

Read: Transnet’s Record R8.4bn Loss for Covid-Hit Financial Year

He noted that the group embarked on a major cash conservation campaign to “survive SA’s massive economic slowdown” due to the Covid-19 pandemic and related shutdowns last year. This included cutting its capital spending by almost 15%.

“As we deal with Covid-19, Moody’s [rating agency] downgraded SA’s credit rating even further last year, and as a public company [state-owned enterprise]Transnet was also directly affected, ”said Derby.

“Despite all this, we continue to pay all of our staff in full, some 55,827 of them, without cutting any benefits,” he said.

“Despite everything the group faced, our bottom line remains resilient.”

Derby said the group’s shift from a profit in its previous financial year to a loss of R8.4 billion was largely due to the financial fallout from Covid-19.

“Transnet, as one of the essential service providers for SA, continued to fulfill its mandate despite blockades at the national level since March 26, 2020. However, Covid-19 had a material adverse impact on operational performance, the financial results and workforce of the company. ”, He emphasized, reiterating sentiments in the group’s Sens statement of results.

Transnet reported that the group’s revenue decreased 10.5% to R67.3 billion, while its Ebitda (earnings before interest, taxes, depreciation and amortization) plummeted almost 43% to R19.5 billion, then that its Ebitda margin decreased to 28.9%.

This resulted in its cash generated from operations sliding to R24.4 billion, while capex for the financial year dropped to R15.9 billion.

The group ended its financial year with 48.7% leverage (its debt is around R129bn) and “2x” cash interest coverage.

Debt service costs amounted to R 29 billion in terms of principal repayments and interest paid.

The CFO of the Transnet group, Nonkululeko Dlamini, said that considering the impact of Covid-19 on the group, especially in the first half of its financial year (April to June), when tougher closures were implemented, revenues were subdued. at significant pressure.

“We saw a significant reduction in our income line. It was the year of Covid-19 and we were expected to get this kind of performance, ”said Dlamini.

“What’s critical is that we were still a cash-generating business,” he added.

When asked about Transnet’s prospects, Dlamini was much more optimistic, saying there has been a “significant improvement” in business for the current financial year.

He did not give details, as the group will update the market in its 2022 semi-annual results.

“The new [financial year] It has experienced a significant improvement than last year. We have certainly seen an improvement and we have a better trend for this year, but we must be aware of the impact of a possible new wave of Covid-19, ”warned Dlamini.

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