Transnet swings to R1.6 billion interim loss as volumes decline, expenses surge

South Africa’s troubled state logistics firm Transnet swung to an interim loss after reporting lower rail, petroleum and container volumes.

The company posted a loss of R1.6 billion for the six months through September, compared with a profit of R159 million a year earlier, Transnet said in an emailed statement on Friday.

The company blamed collisions and community unrest on its coal railway lines, as well as equipment challenges, for lower volumes of ore and coal delivered.

Derailments, cable theft and power outages also affected all lines, Transnet said.

“The first half of the financial year was clouded by uncertain economic conditions, perpetual operational challenges, load-shedding and subdued business performance,” the logistics firm said.

Rail and petroleum volumes were down 7%, while container volumes declined nearly 2%. Net operating expenses jumped 10% to R25.3 billion on higher salaries, electricity tariff increases, pipeline theft, vandalism incidents and material costs. 

“The first half of the financial year was clouded by uncertain economic conditions, perpetual operational challenges, load-shedding and subdued business performance,” the logistics firm said, referring to electricity rationing by state-owned power utility Eskom.

A longer-than-anticipated shutdown of South Africa’s inland crude oil refinery, Natref, in the first quarter was primarily behind the decrease in petroleum volumes, while container volumes fell due to harsh market and weather conditions and equipment challenges.

Transnet is executing a recovery plan backed by a R47 billion government support package to help meet immediate debt obligations.

The program is in its third month and is expected to be fully executed in 18 months. It’s aimed at improving operations and recovering volumes by enhancing the availability and reliability of critical equipment.

“Procurement optimization — particularly for critical spares — more efficient capital allocation to drive volume throughput, and maintenance delivery are a top priority,” Transnet said.