Transnet swings to R5bn profit from R8bn loss in previous financial year

Bruce Whitfield talks to Group CEO Portia Derby about state-owned Transnet's results for the 2021/2022 financial year.

FILE: The Transnet port terminal at the Durban Container Terminal. Picture: Transnet.

Transnet has reported a net profit of R5 billion for the 2021/2022 financial year despite ongoing operational issues.

The beleaguered state-owned ports and railway company had posted an R8.7 billion loss for the previous financial year.

FILE: The Transnet port terminal at the Durban Container Terminal. Picture: Transnet.

Full-year revenue was up 1.8% at R68.5 billion for the year ended 31 March 2022.

It also received an unqualified audit report for the first time since 2018.

Transnet says it got net operating expenses down by 5.9% through cost-saving initiatives along with a reduction in provision and third party settlement, partially offset by voluntary severance packages.

Image: Transnet @follow_transnet

South Africa's ports have been rated as some of the worst-performing in the world, while our railway lines also leave much to be desired.

However there has been a change in management at Transnet notes Whitfield, and they are bringing about improvement.

He interviews Group CEO Portia Derby (appointed in January 2020).

For us meeting the deadlines, also being able to present financials where we have actually started looking at the very basics in the business... [was a watershed moment]...

Portia Derby, CEO - Transnet Group

...and we own a huge property portfolio, so just beginning the appropriate, correct valuation of property and setting the balance sheet on the right path was actually crucial for us as we move forward.

Portia Derby, CEO - Transnet Group

How is management addressing the dual problems of homeless people taking over its rail stations and others vandalising and stripping its infrastructure?

Are Transnet's ongoing security and legal problems grounds for force majeure?

Some of the worst of the trespassing happened as a result of that very hard lockdown, and... a lot more people were desperate than not.

Portia Derby, CEO - Transnet Group

With regard to the rail system, she says they have has not suffered as much as some other companies from infrastructure being damaged through the theft of metal.

Transnet's biggest problem, as for Eskom and the telecoms providers she says, is the theft of copper cable.

It's a priority area for us now. One of the things we're also doing in the course of this year is to come back to revisit the question... of the rail police there used to be... They were a peculiar type of instrument at the time and also more for passengers and not freight.

Portia Derby, CEO - Transnet Group

We're having to ask the question, shouldn't we up the amount of security we have at Transnet who are our own staff and rather go for a hybrid model with third party service providers...

Portia Derby, CEO - Transnet Group

...because, let's not lie, whenever there's a major change in the contract, it's an area of risk... so what we've got to do better is at the core of the infrastructure we should be taking direct care of.

Portia Derby, CEO - Transnet Group

In the coming year 5% of Transnet's expenditure budget will go to security, which signifies a huge cost she says. (up from the past year's 4%).

"It's about R4 billion we'd be spending just on security."

No clear plan on how Transnet will fix port inefficiencies - SA citrus exporters

Regarding complaints about port efficiency particularly from fresh produce producers, Derby says Transnet has been liaising with the agricultural sector and has worked hard to meet performance requirements.

Listen to the in-depth interview with the Transnet CEO below:

This article first appeared on CapeTalk : Transnet swings to R5bn profit from R8bn loss in previous financial year