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According to S&P, Transnet’s operational improvements are expected to be gradual, but the company’s cash flow is unlikely to rise sufficiently or quickly enough to sustain its current liquidity, leverage, and capital structure.
Transnet has been placed on CreditWatch by S&P Global Ratings following the agency’s annual review of the state-owned company. the decision reflects mounting concerns over its financial outlook.
According to S&P, Transnet’s operational improvements are expected to be gradual, but the company’s cash flow is unlikely to rise sufficiently or quickly enough to sustain its current liquidity, leverage, and capital structure. Additionally, elevated capital expenditure requirements and debt servicing costs leave the company with limited room to manage operational underperformance. S&P also noted that Transnet may require additional government support to address these challenges.
In response, Transnet emphasized the steps it is taking to address these concerns through its Recovery Plan, which was approved by the board in October 2023. Group chief executive Michelle Phillips highlighted the plan’s importance in improving operational and financial performance.
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Transnet further indicated that management will provide regular updates to S&P over the coming months, detailing progress on operational improvements, capital investment plans, and adjustments to its capital structure.
