South Africa\u2019s state-owned rail and ports operator reported a wider first-half loss as failing infrastructure and security issues continue to hamper progress in turning the business around.<\/p>\n\n\n\n
Transnet SOC Ltd.\u2019s loss was R2.2 billion ($118 million) in the six months through September, compared with R1.6 billion a year earlier, it said in an emailed statement on Tuesday. The company once more secured waivers \u2014 as it did last year \u2014 from banks to avoid triggering a debt default, after it breached loan covenants during the period.<\/p>\n\n\n\n
The rising cost of servicing Transnet\u2019s debt eroded its measure of cash interest cover \u2014 the amount of interest expenses a company can pay from earnings \u2014 to 1.9 times, while a number of loans require as much 2.5 times, it said. Net finance costs increased 7.9% to R7.1 billion during the period.<\/p>\n\n\n\n
The company that\u2019s essential to South African import and export flows has had an abysmal performance in recent years. Rail inefficiencies cost the economy more than R400 billion in 2022, according to the National Treasury, while the nation\u2019s minerals council estimates mining exports fell R50 billion short of target. The ports it runs have been ranked among the worst in the world.<\/p>\n\n\n\n
\u201cTransnet has made progress, with early successes in stabilizing operations, improving financial performance, and addressing infrastructure challenges,\u201d it said. The company will prioritize projects that improving the availability of rolling stock and the condition of rail infrastructure. Ports have focused on fixing key equipment and securing critical spare parts.<\/p>\n\n\n\n
Transnet launched a turnaround strategy more than a year ago to overhaul its rail and port services and tackle the fallout from years of mismanagement, theft and vandalism.<\/p>\n\n\n\n
\u201cSignificant work remains, particularly in areas including debt management and security,\u201d it said. \u201cTransnet\u2019s progress in line with its recovery plan continues to be hampered by operational challenges that are impeding the clear progress made in revenue and cash generation from operations after working-capital changes.\u201d<\/p>\n\n\n\n