South Africa: Transnet Financials On the Wrong Side of the Tracks, but There's No Need for a Begging Bowl

analysis

Transnet released its results late last week and, to the relief of the government and taxpayers alike, this is one state-owned entity that will not need to go cap in hand for a bailout. However, the company is no longer the cash cow it used to be, and the group's performance and financial metrics are looking a tad shaky.

Transnet CEO Portia Derby has been at the helm of the organisation for a little over nine months - long enough to get to grips with the operational and financial challenges facing the giant logistics operator.

Of the six major risks identified as being a threat to future prosperity, two have the real potential to derail Derby and her team's turnaround efforts. These are Transnet's financial sustainability and its market growth risk - in other words, its poor service and poor infrastructure, which are causing customers to seek alternatives.

The latest set of financial results - while superficially solid - reflect cause for concern.

Despite economic growth of just 0.2% in 2019, and many operational challenges, Transnet realised a 1.3% increase in revenue to R75.1-billion, largely thanks to an average tariff increase of 2.9%.

But volumes in the group's largest business...

More From: Daily Maverick

Don't Miss

AllAfrica publishes around 800 reports a day from more than 130 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.