Grindrod reports strong Q1 2020, but expects revenues decline in April

Grindrod revenues decline April

Grindrod reported a strong Q1 2020 across the majority of the Group’s businesses. There was little impact on shipments of commodities to China and only marginal impact in the container business on inbound shipments from the East. However, the COVID-19 pandemic is impacting all aspects of the global economy; according to Grindrod, the lockdown in South Africa is impacting most of the businesses in there and in Maputo as trade flows either cease or are severely restricted.

The Group’s Port and Terminals businesses expect revenues to decline during April as a result of the lockdown in South Africa and closure of the border with Mozambique. The extent of the impact will depend on the duration of the closure of the South African mineral businesses and the flow of mineral cargo through the Mozambique border. Early indications reveal that the government may allow some dispensation for the mines to continue operating under strict conditions once they have secured the necessary approvals. This may mitigate the impact on the Port and Terminals.

Grindrod said that its container businesses are assisting with essential cargo. Containers with non-essential cargo are evacuated to depots for later delivery. Container berths across the South African ports have been significantly reduced and therefore the businesses are operating well below optimal levels. Furthermore, it added that the northern Mozambique business continues to provide essential logistics supplies to the Palma region. The Carrier businesses have ceased operating with minimal requirement for fuel transportation.

The North-South Corridor is currently limited to essential cross-border traffic. The Rail business is expected to see a reduction in earnings.

The management of Grindrod said that it is committed to support the governments of the countries in which it operates, working with customers, communities, suppliers and stakeholders to mitigate the impact of COVID-19 and address the long term effects on its  business. Grindrod added that it is regular engagement with its supply chain partners is enabling the businesses to respond to clarification from the regions on essential trade.

Finally, the company clarified that it has identified non-essential cost items, and projects are being deferred accordingly.

Source: Grindrod

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