Transnet’s record R8.4bn loss for Covid-hit financial year

Covid-19 has dealt a massive financial blow to state-owned ports and rail logistics group Transnet, which reported a record net loss of R8.4 billion on Friday for its financial year to the end of March 2021.

This is compared to a R7.9 billion profit in its prior financial year (FY2020).

After a long delay, the group finally released its latest financial results late on Friday.

The group saw revenue decline 10.5% to R67.3 billion, while its Ebitda (earnings before interest, taxes, depreciation, and amortization) plunged almost 43% to R19.5 billion, after the group’s Ebitda margin declined to 28.9%.

Reiterating the group’s Sens results statement, Transnet CEO Portia Derby said the performance was “reflective of the economic circumstances” faced by the company, largely due to the impact of the Covid-19 pandemic and related lockdowns.

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“Transnet, as one of the providers of essential services for South Africa, continued to deliver on its mandate despite nationwide lockdowns since 26 March 2020. However, Covid-19 had a material adverse impact on the operational performance, financial results and workforce of the company,” the group noted in its Sens.

“In the 2021 financial year, Transnet incurred a financial net loss of R8.4 billion, mainly as a result of
the Covid-19 impact on our operations and other expenses that are not normal to our business
operations, either due to their nature or quantum,” it added.

Transnet said this included:

• Unusual environmental management expenses of R1.2 billion
• Provision for unusual third party claims of R3.6 billion, and
• Impairments of R1.6 billion

“Without the impact of the above expenses, Transnet’s net financial loss would have been R3.8 billion
instead of R8.4 billion,” it pointed out.

Transnet stressed that it remained a cash generative business, despite the impact of Covid-19 on its operations.

It said that cash generated from operations decreased to R24.4 billion, while capex for the financial year amounted to R15.9 billion. The group ended the year with gearing of 48.7% and a cash interest cover at ‘2 times’. Its debt service costs came to R29 billion in terms of both capital repayments and interest paid.

“Throughout the Covid-19 crisis, Transnet continued to meet its financial commitments without
requiring any debt service relief from its lenders,” it noted.

“Transnet remains cash generative and has not required government support during the 2021 financial year,” it reiterated.

Article written by Suren Naidoo