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Though marginal, Transnet SOC (Ltd) has seen some improvement in its operations. The parastatal has been plagued by a plethora of challenges affecting its financial performance and eventually denting the image of South Africa.
The improvements in Transnet have also influenced business and investor confidence towards the South African economy. According to its interim unaudited report for six months ended September 2024; Transnet says it has seen an increase in volume in rail business attributed to the implementation of the recovery plan.
The Group is beginning to see some fruits in its diligence from its turnaround strategy; the parastatal reported a revenue increase of R41,5 billion in 2024, from R39,2 billion in 2023, translating into a 6.0% increase. While this is commendable, Transnet is not out of the woods yet as it also recorded a loss of R2,2 billion, an increase compared to the R1,9 billion loss in 2023.
According to Transnet, revenue increase was in line with weighted average tariff increases in the rail, port and pipeline businesses, and a 3,2% increase in rail volumes which was partially offset by lower container and petroleum volumes.
“Container volumes decreased due mainly to market challenges, equipment availability and adverse weather conditions. Petroleum volumes decreased due to low market demand and challenges experienced post the planned refinery shut-down. The positive operational volumes achieved at Freight Rail were however, impacted by various operational challenges, including security related incidents, rolling stock unavailability and the condition of rail infrastructure,” explained the Group CEO Adv. Michelle Phillips.
Net operating expenses increased by 10,2% to R27,9 billion (2023: R25,3 billion) due mainly to increased personnel costs, security incidents, fuel and electricity tariff increases, maintenance and material cost increases (mainly for locomotives and wagons).
Earnings before interest, tax, depreciation and amortisation (EBITDA) decreased by 1,6% to R13,6 billion (2023: R13,8 billion) with a resultant decrease in the EBITDA margin to 32,8% (2023: 35,3%).
Net finance costs increased by 7,9% to R7,1 billion (2023: R6,6 billion) due mainly to interest rate hikes and increase in total debt compared to the prior period. The South African Reserve Bank, however, lowered interest rates by 0,25% on 19 September 2024, its first-rate relief since the pandemic in 2020.
