With its transnet turnaround now complete, Transnet is poised for growth
IT IS now more than three years since Transnet CE Maria Ramos revealed a turnaround plan for the group, and its financial performance is now fairly predictable, and stable.
The slimmed-down state-owned freight transport and logistics company has hived off numerous assets and focused on freight transport and logistics.
This is at least its second year of continued improvements in its performance and begs the question of how long Ramos plans to stay in the hot seat.
In the six months to September, Transnet reported a 10 percent increase in revenue to R15,7 billion and an 8percent rise in earnings before interest, tax, depreciation and amortisation to R6,4billion - a credible performance but nowhere near that of many industrial companies in 2007, a boom year.
A measure of the slimming-down process is evident in the fact that in 2004, when Ramos started at Transnet, revenue was R41 billion.
One significant feature of the current interim results is the 59percent increase in capital expenditure to R6,8billion. This is part of the R78 billion five-year capital expenditure plan.
Transnet results show that disposals of non-core assets is almost complete.
In 2004 Ramos indicated the potential sale of FreightDynamics, Autopax Passenger Services, Metrorail, Shosholoza Meyl, Transnet Housing, Transnet Pension Fund Administrators, V&A Waterfront, Viamax, Equity Aviation, VAE Perway and SAA, the latter being transferred to government.
At the time of Ramos' appointment, her role was to ensure there is a viable financial and operational strategy and then implement it. She had indicated that she was best suited to fixing things up rather than caretaking, and the current results indicate the fixing up has been achieved.
Ramos said yesterday the results confirmed that Transnet's turnaround was complete, and it was now "poised for growth".
Since the disposals, Transnet is now exclusively focused on freight transport and logistics under its freight rail, rail engineering, pipelines, port terminals and National Ports Authority divisions.
All except pipelines showed revenue growth and all except freight rail showed volume increases.
Cash flow from operating activities grew by 11% to R4,7 billion and cash generated from operations after working capital changes rose by 6% to R6,1 billion.
Cash generation is vital ahead of the increase in pace of the capex programme "which will be funded on the strength of our balance sheet", Ramos said.
"Continuous re-engineering of the business should place Transnet at the centre of the country's growth drive."
Ramos said that volumes of cargo railed by Freight Rail's general freight business grew for the first time in two decades.
Iron-ore and coal volumes were below contracted levels "primarily due to insufficient supply from the mines, while Freight Rail's general freight business and coal line continued to be negatively affected by cable theft and derailments."
The pipelines business finally got the licence to build the long awaited multi-product pipeline from Durban to Gauteng, estimated to cost R11,2 billion and to be completed by 2010.
Ramos said that "the focus in coming months and years is on growth through volume increases supported by the investment programme and our efforts to continuously re-engineer the business; improve the safety of our people and clients' cargo; hasten the implementation of our HR strategy; and, importantly, to provide an integrated service offering to our clients".