Transnet SOC Ltd. said profit rose to a record after South Africa’s state-owned port and rail operator boosted capacity to haul commodities and general goods.
Net income advanced to 5.17 billion rand ($488 million) in the 12 months ended March 31 from 4.14 billion rand a year earlier, Chief Executive Officer Brian Molefe told reporters today in Johannesburg. Revenue increased 13 percent to 56.6 billion rand, he said.
Transnet is investing about 308 billion rand over seven years through 2019 to increase capacity in rail freight, ports and fuel pipelines in Africa’s second-biggest economy. It hauls coal for producers including Glencore Plc (GLEN) to Richards Bay Coal Terminal, the world’s biggest such facility, and moves goods for manufacturers such as Nissan Motor Co. (7201) It signed a 50 billion-rand contract with four companies including General Electric Co. (GE) and Bombardier Inc. (BBD/B) to supply 1,064 electric and diesel locomotives in March.
“It’s the first time that our profits are above 5 billion rand,” Molefe said.
The company hauled 210.4 million metric tons of coal, iron ore, manganese and goods during the year, with its freight unit accounting for half of revenue, Transnet said in a statement handed to reporters. It plans to spend 33 billion rand to improve infrastructure in the year through March 2015, Chief Financial Officer Anoj Singh said.
Standard & Poor’s cut the nation’s credit rating to one level above junk on June 13, concerned that a slowdown in growth will make it difficult for the government to stick to its budget targets. The reduction also applied to Transnet, and means the company has to reprice 8 billion rand of debt at a cost of 41 million rand, Singh said.
Transnet’s debt rose 24 percent to 90.4 billion rand during the year, with a debt-to-equity, or gearing, ratio of about 46 percent.
The volume of coal hauled in the period fell to 83.1 million tons from 84.3 million tons a year earlier mainly after Richards Bay Coal Terminal, located on South Africa’s northeastern coast, had to halt operations for almost 10 days in February because of faults on municipal power cables that cut supply, Molefe said.
“We were impacted by the price of coal,” he said. “That caused suppliers to hold back on supply of coal.” Prices of the fuel delivered to northwest Europe from Richards Bay declined 15 percent to $77 a ton in the period.
The volume of iron ore railed for export declined 3 percent to 54.3 million tons, he said. Transnet moves the steelmaking ingredient for clients such as Anglo American Plc’s Kumba Iron Ore unit.
Transnet is planning to conclude a three-year wage agreement with unions as the current deal expires in March.
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