Transnet swings to interim loss as volumes drop, costs climb

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

The company posted a loss of 1.6 billion rand ($86.9 million) for the six months through September, compared with a profit of 159 million rand a year earlier, Transnet said in an emailed statement on Friday.

The company, whose snarled rail and port facilities have hindered South African businesses and stunted the country’s economic growth, blamed collisions and community unrest on its railway lines for lower volumes of ore and coal delivered. Derailments, cable theft and power outages also affected operations.

“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 Holdings SOC Ltd.

Net operating expenses jumped 10% to 25.3 billion rand on higher salaries, electricity tariff increases, pipeline theft, vandalism incidents and material costs. Rail and petroleum volumes were down 7%, while container volumes declined nearly 2%, Transnet said. 

Read more: South Africa Says Transnet Aid a Safety-Seeking ‘Kick to Touch’

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 47 billion rand 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.