Group swung to a headline loss of R3 billion for the six months ending September 2020, compared to a R2.9 billion headline profit for its 2019 interim period. A significant impact in its business, with the global Covid-19 pandemic and tougher government-instituted initial lockdown measures designed to curb the spread of the virus resulting in a major drop in freight rail and port volumes. Freight rail experienced a 16.4% drop in volumes, while port container volumes plunged 20.7%. The freight rail business accounts for around 60% of the group’s revenue, while ports (including Transnet Port Terminals and Transnet National Port Authority) is the second largest contributor, at around 35% of revenue. Transnet, which also operates fuel pipelines that largely run from Durban to the economic heartland of Gauteng, saw pipeline volumes plummet 38%. However, this is a comparatively small part of its business.
Transnet’s half-year results are on back of the South African economy suffering a significant contraction during April, May and June of 2020, when the country operated under nationwide lockdown restrictions in response to Covid-19. The group is not a JSE-listed tradeable stock as it is wholly owned by the South African government. However, the group has a debt listing on the JSE which advises noteholders of its financial performance and debt position from time to time. The group noted in a separate media statement that the closure of construction sites and disruptions in procurement supply chains during Level 5 lockdown was the reason behind the decline in capex and maintenance. The company is reporting a rebound in freight rail, port container and pipeline volumes. Transnet noted that as lockdown restrictions have been eased, it has experienced month-to-month improvements in performance across key indicators. The emergence of a second wave of the Covid-19 pandemic brings about a level of uncertainty on the 2021 financial year performance.