Artwell Dlamini
9 October 2008
Johannesburg — Grindrod's resolve remains unshaken in the midst of the global credit crisis and sharp decline in world shipping rates.
CEO Alan Olivier said yesterday the trading update the shipping group issued in August was "still valid" and showed that "we are still confident" about the business's prospects .
In a statement at the time, Grindrod said it expected its earnings and headline earnings per share for the year to December to increase by between 80% and 100% on the 263,1c reported in the corresponding period last year.
In its interim results released in the same month, Grindrod said: "Shipping market fundamentals continue to be positive and consequently earnings are expected to remain at firm levels for the balance of the 2008 financial year."
The fundamentals were supported by strong demand for commodities in China and India, it said.
However, trading conditions have changed dramatically in the past few months. The Baltic Dry index, which tracks international shipping rates, has plummeted recently to 2922 from a peak of more than 11000 in May.
Olivier said yesterday the index had fallen steeply because it had risen to unsustainable levels in the first place. The latest "correction" had brought the index to a "reasonable level". He said the index had initially declined due to seasonal softness and reduced industrial activities in China because of the Beijing Olympics in August.
Now the index seemed to be responding to the global credit crisis.
He said the shipping sector was not "immune" to this crisis. The credit crunch might delay new ship deliveries, Olivier said, and noted this was positive for the shipping industry.
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