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Finance: Grindrod Increases Interim Headline Earnings by 95%


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Grindrod Limited released its interim results for the six months ended 30 June 2008 today. The company generated earnings of over 1 billion rand (R1 104,5 million) for the six months ended 30 June 2008, relative to the R570,5 million of the same period in 2007, up 94%. Headline earnings per share increased by 95% to 242,8 cents per share (H1 2007: 124,6 cents).  Interim ordinary dividend per share has increased by 100% to 68 cents (H1 2007: 34 cents).  The board also declared a preference share dividend of 589 cents per share (H1 2007: 498 cents). Return on ordinary shareholders’ funds was 68% (H1 2007: 52%).

Chief Executive Alan Olivier said out of Gauteng that “the results were achieved against the backdrop of a continued buoyant shipping market and substantial demand for commodities. The strong markets have enabled the group to secure substantial contracted profits at very favourable rates and the strategies that have been put in place to acquire and charter in a modern shipping fleet at low costs over prior years, continue to pay dividends.”

The group said that shipping continued to be the major profit contributor at 90% of total earnings. Its profits were up 107% on the corresponding period. Freight Services experienced good growth in earnings of 65%.  Trading did not perform as expected, but is positioned for a strong second half.  Financial Services results were impacted by the reduced shareholding, declining equity markets and the slowdown in local economic activity.  

As at 30 June 2008, 64% of Grindrod’s owned and chartered fleet was contracted for the remainder of 2008, 51% for 2009 and 35% for 2010. The group will look to further expand this base for 2009 and beyond. Grindrod’s current core fleet of 37 ships is also contracted to increase to 51 ships by the end of 2012.

The group has continued its investment in growth, with capital expenditure and commitments totaling R2 169 million for 2008, R1 192 million for 2009 and R1 128 million thereafter. These commitments will be funded by cash resources, cash generated from operations and bank financing facilities. Its cash generated from operations reflected a growth of 83% during this period, to R1 342 million.  The group’s debt:equity ratio decreased from 23% to 14%.  The strong balance sheet, conservative gearing and high cash generation provides the platform for the group to continue to seek investment opportunities.

In terms of the outlook for the remainder of 2008 and beyond, the company said that shipping market fundamentals continue to be positive and consequently earnings are expected to remain at firm levels for balance of the 2008 financial year. The group has significant contract cover and will continue to add to this base. Further improvement is also expected in the performance of the Trading, Freight Services and Financial Services divisions which are being expanded through investment, mainly in infrastructural development opportunities.

The group indicated in a trading statement released earlier today, that it expects headline earnings per share for the 2008 financial year to be 80% to 100% higher than the 263,1 cents  achieved in 2007.

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