‘Weak’ shipping market sinks Grindrod earnings

Evidence that the world is
still struggling to break out
of the recession is seen in
an 81% decline in earnings
over the first six months
of 2011 by Grindrod’s
shipping division.
The group has an owned
and long-term chartered
fleet of 35 vessels, of which
57% (weighted by revenue)
are contracted out for the
second half of 2011 and
28% (weighted by revenue)
for 2012.
In his interim financial
report for the first six
months of the year, CEO
Alan Olivier says the
drybulk business “despite
a weaker market” achieved
overall average earnings
per day above average spot
rates across all sectors.
The tanker business
experienced reduced
profitability through the
continued worldwide
downturn in chemical and
industrial production.
However, Grindrod sees
signs of an upturn in 2012,
as there has been a “sharp
spike” in medium-products
tanker earnings, as well
as a rise in asset prices
for new and second hand
tankers.
Ship operating results
were adversely affected
by the performance of
the parcel service where
profitability declined due
to the increase in the piracy
zone, that led to increased
steaming time.
The South African
based tanker operating
joint venture with Calulo
Shipping performed “well”
as did the local bunker
tanker business.
The Rotterdam bunker
barge business was affected
by the depressed market as
a result of oversupply.
Commodity demand
remains firm, however,
is outweighed by the
oversupply of ships.