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Not a bad year for Grindrod

CEO Andrew Waller reports 60% of the company’s revenue is now from outside SA, in Africa, with considerable exposure in Northern Mozambique.

SIMON BROWN: I’m chatting with Andrew Waller, Grindrod CEO. Results for the year ending December (are in). Revenue down a smidgen: R3.75 billion versus R3.83 billion; diluted headline loss at 24.6 versus 22.50 cents for the full year. 

Andrew, good morning. I appreciate your early morning time. When I go through your results, on the surface, as I mentioned, revenue down a little, a headline loss. Considering the pandemic and a year that no one anticipated operationally, (it was) actually not a bad year for Grindrod broadly.

ANDREW WALLER: Indeed, Simon. Thank you. If you had told us we’d get to these numbers in May or June, we would never have believed you. So a very good set of results from the freight services team, and the bank itself also managing to get through what was a very difficult time for everybody.

SIMON BROWN: And tough for ports and terminals – still doing well. You mentioned in the results a strategic focusing on the corridor approach. Explain the corridor approach to us – how that works for Grindrod.

ANDREW WALLER: We all know that the most important part of getting products to China and India out of Africa is the logistics chain. You can almost double again the cost of transport onto the mineral cost. So we’ve got to focus on making sure that we get everything out of that logistics chain possible, to make it affordable for the miners; and the same with agri. We’ve got to make sure that we work with the customer to get the product to the end, and helping get that product out of Africa is our key.

SIMON BROWN: I remember years ago looking at a presentation from Grindrod and being surprised that, if we were looking for Africa exposure, Grindrod was in the rest of the continent way more than the traditional Standard Bank or Shoprite or the like. Essentially, you’re going to pick up that citrus or that commodity at source, and give that entire supply chain to the company.

ANDREW WALLER: That’s absolutely, Simon, quite right. And you say exposure to Africa – 60% of our revenue is now outside of South Africa, in Africa. So it’s quite a lot of exposure in Mozambique. In Congo obviously, we are helping take the copper out of the Congo and putting the salsa in, we’re running trains on the Dar es Salaam line, as well as the north-south corridor. So lots of exposure outside of southern Africa and obviously the dollar … did help us a little bit in the current term.

SIMON BROWN: In Northern Mozambique – that’s the liquified natural gas (operation). [There are] media reports of conflicts in the region – is it as bad as the media says? Is it having an impact or is it something that is there but which you’re able to manage?

ANDREW WALLER: A very difficult position in Northern Mozambique. It’s obviously been there for a long, long time. We remember the war many, many years ago, and it hasn’t been properly resolved. And of course, as soon as you get a development like a gas development, it is going to come to the surface. So a lot of work that the government has to do. We work under the auspices of Total in the north. They run everything in that area. So we’re very much driven by their protocols. They are working hard with, as you know, a number of governments to make sure that that unrest is settled. As you would expect, the media is always over the top and a little late. So we’re not quite in the position that you read about at the moment.

SIMON BROWN: I take your point in that. The media likes a good story – “if it bleeds, it leads”. A quick last question and this isn’t directly (about) you, because Grindrod Shipping is now separate. There were a lot of reports earlier in the year around container shortages. Is that an impact for you, or is that somebody else’s problem, or has it resolved its way out of the system?

ANDREW WALLER: We do have a number of ships, four ships in our business, that run around the coast and we have seven servicing Mozambique at the moment. But those we’ve got all on long-term contracts. So we’re okay as a business on the ship side. 

On the containers themselves, with all of the Covid shutdowns, the containers all ended up in the wrong places in the world – all those supply chains all over the place. So we are helping the likes of Mert [Shipping] to reposition containers to the East again. And that has helped us a little bit in the second half. So yes, our customers and our caring and forwarding businesses are crying because those rates in the containers are exceptionally high. 

But I do think that you’re going to see, and you’ve seen it across the board, all shipping rates, the [Handymaxes], the Supramaxes, the Cape and even the tankers, all those rates are now starting to rise due to the lack of building over the last five to 10 years in the market.

SIMON BROWN: Got you on that. Okay, so the capacity issue. We’ll leave that there. Andrew Waller, CEO at Grindrod, I so appreciate your early morning time.



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