Transnet has posted an attributable profit of R6.8-billion for the past financial year compared to a R6.3-billion loss last year, the company announced in Johannesburg on Monday.

Turnover increased a "respectable" six percent to R46.2-billion — "although we can do even better," Transnet chief executive Maria Ramos said.

Capital and reserves had "improved quite significantly" by 71 percent to R16.9-billion.

Transnet's chief financial officer Chris Wells said all core businesses grew by six percent while non-performance was restricted to non-core units.

The company's gearing had improved from 83 percent to 67 percent but was still "nowhere near" the targeted range of between 50 and 55 percent.

Shareholders (government) and Minerals and Energy Minister Alex Erwin had approved shedding Transnet's non-core business, Ramos said. This would free the company to focus its efforts on freight transport to the bulk and manufacturing sectors.

The divestment programme, to be completed within the next 12 to 18 months, was expected to reduce Transnet's turnover to R27.7-billion, compared to R46.3-billion for 2005.

"The important thing for us is that we begin to focus and improve our profit margins very significantly," Ramos said.

South African Airways (SAA), which is 95 percent owned by Transnet, showed a 6.7 percent increase in turnover. This was "just through operational effectiveness," Wells said. The airline's operating profit had improved to R0.9-billion after a loss of almost R4-billion.

Ramos said the aim was for SAA to leave the Transnet stable by the end of March 2006.

The company had approved a R40.8-billion investment plan to address the backlog in maintenance and upgrading which it would "pursue aggressively," said Ramos.

Half of this would be financed through operating cash flows. The rest would be borrowed and reduced by net cash from the divestment programme. "The only way we can get market share back is if we deliver every day, 365 days a year."

Ramos said one of the company's biggest challenges had been its internal audit function, which had not been up to standard and would, in future, be outsourced. Ramos said the problem had been building up over many years.

While the company's operating profits in prior years had been very "up and down," it stood at 12.6 percent for the 2004/2005 financial year.

"This should be the base from which we build into the future," said Wells.

A clearly pleased Ramos said despite the good news there was still a difficult road ahead. "We can now move towards the future with a confidence that our prospects for success have never been as good as this," Ramos said.

Chief economist at T-Sec, Mike Schussler, said the results looked "pretty good" and were "probably" good news for the economy as a whole.

It was important that turnover had grown faster than inflation, he said.

"Hopefully they can keep their costs down. I hope the results are sustainable in the long term. She's (Ramos) still got a long, hard slog ahead of her. It's the best performance in six years.

"It's going to have to be sustainable because it's very important for the economy and the country."

Sapa

SA economy South Africa is the economic powerhouse of Africa, with a gross domestic product four times that of its southern African neighbours and comprising 25% of the entire continent's GDP.

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